Third in the series of meetings to rev up economy
Representatives of the automobile industry, who met Finance Minister Nirmala Sitharaman on Wednesday, have sought a lower Goods & Services Tax (GST) and a higher depreciation rate to tide over the current crisis. They also impressed on Sitharaman the need for a host of others measures to help the sector ride out the rut.
The Finance Minister has been meeting representatives of various sectors to understand the issues concerning them even as several key agencies have lowered growth projection for India.
Wednesday’s meeting, the third in the series, was attended by RC Bhargawa, Chairman, Maruti Suzuki; Pawan Munjal, CMD, Hero Motors; Nirmal Mind, CMD, Uno Minda; Gurpratap Bopara, MD, Skoda India; besides the Presidents of three industry bodies — SIAM, ACMA and FADA.
According to sources, the government is expected to come out with a detailed action plan for boosting the economy.
The auto industry has been on the slow lane for the last one year.
The sale of passenger vehicles declined by 18.42 per cent in April-June 2019 over the same period last year. Within the passenger vehicles category, sale of passenger cars, utility vehicle and vans declined 23.32 per cent, 4.53 per cent and 25.66 per cent, respectively, in April-June 2019 over the same period last year.
2 lakh workers laid off
According to the Federation of Automobile Dealers Associations (FADA), around two lakh people have been laid off across automobile dealerships in the country in the last three months.
Auto companies, which feel that the GST rate of 28 per cent plus cess is hurting sales, have been demanding a reduction, at least temporarily.
However, according to a Finance Ministry official, the problem is that collection from the GST is already below expectations and any reduction now will further complicate matters.
Auto companies also want the depreciation rate raised from the present 15 per cent. A higher depreciation rate will have three consequences: First, the resale value will come down faster, which, in turn, will prompt the customer to replace the car sooner.
Second, a higher depreciation rate will bring down the insurance premium from the second year. And finally, higher depreciation will allow businesses to claim higher business expenses and thus lead to more tax benefits.
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