While commenting on the “Aatma Nirbhar Bharat” package announced by the Hon’ble Finance Minister through a series of announcements, Mr Rajan Wadhera, President, SIAM welcomed the focus towards MSMEs ; NBFCs and the Agri-sector. The Agri sector package may benefit the Auto sector indirectly in the medium term but the Indian Automotive industry needed an immediate stimulus to boost demand, which has not happened, as per Mr Wadhera.
Indian Automotive Industry supports employment of more than 3.7 crore people and contributes to 15% of GST amounting to Rs 1,50,000 crore every year. The Sector was already facing an unprecedented challenge with 18% degrowth last year. As per an assessment made by SIAM on the impact of COVID-19 on demand for vehicles in the current financial year, the Indian Automobile sector could have a de-growth in the range of (-22)% to (-35)% in various industry segments, for the year FY21, if the overall Indian GDP growth is at 0-1% for FY 21.
Mr Wadhera said that it is against this background that the Industry was keenly looking forward to some direct fiscal measures which could have boosted demand for the Auto sector and stop job losses.
He mentioned that SIAM has had several engagements with Government of India at various levels, where specific suggestions were made for demand stimulus including reduction in base GST rates from 28% to 18% for a limited period and an incentive based vehicle scrappage policy, which would have made it a less painful revival and kick started the industry.
There is also an urgent need to support the dealers in terms of improving their liquidity and including them under MSME Act by changing its definition. The Industry would continue to engage with the Government and seek direct interventions for revival, concluded Mr Wadhera.
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