The sector faces unprecedented job losses with two lakh workers losing jobs amid plunging sales
The representatives of the auto industry sought a stimulus package, including a tax cut, from finance minister Nirmala Sitharaman on Wednesday to deal with one of the worst downturns in the sector.
Sitharaman along with heavy industries minister Arvind Sawant met the executives of the automobile associations and took stock of the situation. The sector faces unprecedented job losses with two lakh workers losing jobs amid plunging sales.
Sitharaman is holding meetings on a daily basis with the leaders of the key industries as well as banks to understand the reasons behind the overall slowdown and devise ways to boost the economy.
"We listened to the auto sector's concerns and informed them that the government will look into them. We discussed scrappage policy and GST rates," said Sawant.
The leaders of the industry have sought a reduction in the Goods and Services Tax (GST) on vehicles.
The auto manufacturers have demanded a reduction in GST from 28% to 18% so that the demand could be revived.
"The government is listening to the demands of the sector and is committed to taking steps to revive demand and growth," said
Rajan Wadhera, president M&M and Society of Indian Automobile Manufacturers (SIAM).
"The government is looking at the GST cut for the auto sector," Wadhera said.
A similar demand has been made by the auto component manufacturers.
"We have sought duty on auto components to be rationalised to 18% from 28% at present," said Ram Venkatramani, president of Automotive Component Manufacturers Association of India (ACMA). He also said that the job cuts have taken place in line with the production cuts by original equipment manufacturers (OEMs).
The industry also discussed the situation with regards to the availability of finance, Bharat Stage 6 fuel emission norms and scrappage policy.
The Road Transport and Highways Ministry in a draft policy has proposed exempting buyers from paying registration fees for new vehicles if they present a scrapping certificate.
The industry also made a demand that the banks should be directed to reduce lending rates for the passenger vehicle segment, which have the lowest non-performing assets (NPAs).
Automakers, component makers and dealers have laid off about two lakh workers in the last few months, as per the Federation of Automobile Dealers Associations (FADA). Overall vehicle sales across all categories declined 12.35% in the June quarter as compared to the same period last year.
The government is likely to meet the auto sector again.
Among those who met the two ministers on Wednesday were R C Bhargava, chairman of Maruti Suzuki, apart from the representatives of SIAM, ACMA and FADA.
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