Finance Minister announces measures to revive auto industry

Finance Minister Nirmala Sitharaman today announced a few measures aimed at reviving the auto industry, which is currently witnessing its worst slowdown in nearly two decades. The announcement was made as part of a media briefing on steps to boost the country's economic growth.

Sitharaman said the government is lifting the ban on purchase of new vehicles by government departments. "So far, the government departments were banned from buying vehicles. They will now be actively told to replace their old ones," Sitharaman said. The government has also raised the rate of depreciation on all vehicles, irrespective of their type, and acquired from now till March 2020, by 15 percent bringing the total depreciation to 30 percent. 

Next, the proposal to levy a one-time registration fee on vehicles and required to be paid upfront has been deferred till June 2020, Sitharaman said.

The finance minister also issued a clarification on a few aspects that she said were a cause for concern for car buyers.

She said BS4 compliant vehicles purchased till 31st March 2020 will remain operational for the entire period of registration. "So the fear that 'what happens to my BS4 vehicle?' (post BS6) need not be in anybody’s mind. As long as their registration is on, they will be allowed and they will be as good as any other vehicle," she said.

While government will focus on setting up infrastructure for development of electric vehicle ancillaries and components, including batteries, for export, both EVs and internal combustion vehicles will continue to be registered, she said.

The government would have gone ahead with the scrappage policy, something that the auto industry has been aggressively demanding, but the same is on hold as it needs to first create the necessary infrastructure for it, Sitharaman said.

While today's announcement is a step in the right direction, the finance minister did not announce any significant steps that could have a major immediate impact towards reviving car sales. For instance, apex automotive body SIAM as well as many automakers had urged the government to reduce the GST rate on vehicles to 18 percent from 28 percent saying the move is imperative to stoke consumer demand, but no such announcement was made today. 

from Autocar India https://ift.tt/2L67K0R
via IFTTT