New Delhi: The Society of Indian Automobile Manufacturers (SIAM) has sought a “bigger stimulus package” to revive the auto industry, which has been heavily dented by the consumption slowdown.
According to SIAM Director General Vishnu Mathur, urgent measures, like reduction in the goods and services tax (GST) from 28 per cent to 18 per cent on automobiles is required to revive the industry. “We find that the downturn in the automotive industry continues at a steeper rate in all the segments,” Mathur said in a video message Monday.
The demand comes in the wake of the slowdown that has pulled the August sales down to its lowest level since 1997-98.
As per the industry data, the August domestic market off-take plunged 23.55 per cent, beyond the December 2000 level when the sales decline was registered at 21.81 per cent.
Industry sales have been on a downslide in the last 10 months due to a high GST and lack of adequate liquidity. The sector had recorded a 18.71 per cent slump in July, the highest monthly sales decline in the past 19 years.
“The August data only highlights the urgent need for the government to come out with some kind of a bigger stimulus package and to strengthen the already provided support by reducing the GST from 28 per cent to 18 per cent,” Mathur said.
“We do not have much time. If we miss on this opportunity, the festival season will also probably be not good. We have to look at the festival season. We must take decisions now to reduce the GST and announce a scrappage policy, which will help revive the industry,” he said.
Earlier, Finance Minister Nirmala Sitharaman had announced a slew of measures, which many experts dubbed as the ‘mini-budget’.
Sitharaman announced several measures to rescue the auto sector, including lifting ban on purchase of vehicles by government departments, and allowing additional 15 per cent depreciation on vehicles bought till March 2020.
The government said the BS-IV vehicles purchased up to March 2020 will remain operational for the entire period of registration.
On Friday, Minister of State for Finance and Corporate Affairs Anurag Thakur said the government had received several representations from various stakeholders, including automobile dealers, OEMs and car manufacturers, regarding the reduction in the GST from 28 per cent to 18 per cent.
He said the central government was open to take the industry’s proposal on reducing the GST on automobiles to the GST Council and asked the auto industry players to reach out to the state Finance Ministers as a decision could only be taken by the council.
Also, the Centre is expected to take a call on the vehicle scrappage policy to arrest the auto sales downturn, which could put to risk around a million manufacturing jobs.
The government is expected to award 68 infrastructure projects worth Rs 5 lakh crore, which include expressway development. These infrastructure projects are likely to generate demand for auto construction equipment.