The COVID-19 outbreak has almost destroyed the market, Amidst the crisis, the Indian automobile industry SIAM requested the government’s assistance and support to empower them to navigate these difficult circumstances by reducing the GST rates by 10% and introduce an incentive-based system in the sector.
Following the request of the Federation of Automobile Dealers Associations (FADA), the Society of Indian Automobile Manufacturers (SIAM) has now approached the Government for GST reduction and launching an incentive-based vehicle scrappage policy.
Passenger vehicle sales in the country dropped by more than 50 percent in March 2020, painting a very difficult picture of what lays ahead for the industry. In fact, according to the SIAM’s estimates, the auto industry is losing ₹2,300 crore in production turnover for every day of closure. India has been under lockdown since 25 March, which is now expected to be lifted on 3 May.
According to SIAM, a tax reduction of 10 percent on all types of vehicles as well as an incentive-based vehicle scrappage policy will go a long way in enabling the industry’s recovery. The incentives with the vehicle scrappage could be offered as a 50 percent rebate in GST, Road tax and registration charges when customers buy new vehicles, it added.
The Society of Indian Automobile Manufacturers (SIAM) also appreciated the RBI’s announcement to support the NBFCs and the MSME sector by infusing liquidity in the system. Several ‘key interventions’ like this is essential for the auto sector, they said.
Earlier this month, the Federation of Automobile Dealers Associations (FADA), in its appeal to the Indian Prime Minister, too had made similar suggestions. Among other things, it too suggested a reduction in GST rate for cars and two-wheelers along with an incentive-based vehicle scrappage policy for all vehicles that have been in use since before 2010.