Mumbai|New Delhi: Automobile industry captains have welcomed the sops announced by finance minister Nirmala Sitharaman on Friday to revive the sector that is going through its worst sales decline in almost two decades.
“The government has done the maximum it could have to revive demand,” said RC Bhargava, chairman of Maruti Suzuki, the country’s largest carmaker. “The hike in registration fees has been deferred. The ball now lies with the state governments. The nine-odd states which have raised road taxes should take cue from the Centre’s approach towards industrial development and roll back the huge increases,” he said.
Guenter Butschek, managing director of Tata Motors, said the measures to improve liquidity, drive growth and reduce the cost of ownership of vehicles should help the industry get back on track.
Measures to boost automobile industry included deferring the revision in registration fee till June 2020, allowing additional 15% depreciation on all vehicles purchased till March next year, lifting a ban on purchase of new vehicles by government departments, and clarifying that BS-IV vehicles bought this year can ply on the road for their entire period of registration even after Bharat Stage VI emission norms get implemented next year.
Vikram Kirloskar, vice chairman of Toyota Kirloskar Motors, said the clarification on BS-IV vehicles will help lift consumer sentiment.
Rakesh Batra, an industry expert, said doubling depreciation rate of vehicles to 30% will incentivise purchase from MSMEs that account for over half the car sales in urban areas. “The steps will bring in buyers, but will it address the liquidity crisis that has impacted auto sales?”
Bhargava expects a significant surge in demand from government departments, but other industry insiders feel lifting the ban won’t necessarily translate into increased sales. The ban was introduced to control outflow of government funds, said Vinkesh Gulati, vice-president, Federation of Automobile Dealers Associations. “They still need funds to buy new vehicles.” Rural demand is also unlikely to lift; thus, benefits will be muted for two-wheeler makers, Gulati said.
Moderation of GST base rate from 28% to 18% would have been the real demand stimulant, said Rohit Suri, managing director, Jaguar Land Rover India. Sitharaman said a reduction in taxation was the prerogative of the GST Council and she cannot comment on the subject.
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