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Govt unveils measures to support auto sector

26/08/2019 | Author: Autoguide | 0 Comments Back To Home   < Previous News   |   Next news >

Finance Minister Nirmala Sitharaman

In a bid to address slowdown in the automobile sector, the Government on August 23 announced a slew of measures, including lifting ban on purchase of vehicles by Government departments, and allowing additional 15 per cent depreciation on vehicles acquired from now till March 2020.
 
Also, BS-IV vehicles purchased up to March 2020 will remain operational for the entire period of registration, Finance Minister Nirmala Sitharaman said.
 
The Centre will lift the ban on purchase of new vehicles for replacing all old vehicles by Government departments, and consider various measures including scrapage policy to boost demand, she said.
 
Besides, both electric vehicles (EVs) and Internal Combustion Vehicles (ICV) will continue to be registered.
 
The key measures announced include the promise that there will be efforts to reduce interest rates for auto and home loans.
 
The minister said the Government’s focus will be on setting up of infrastructure for development of ancillaries/components, including batteries for exports.
 
The Government will also allow an additional 15 per cent depreciation, taking it to 30 per cent, on all vehicles acquired from now till March 2020.
 
The revision of one-time registration fees has been deferred till June 2020, she added.
 
Leaders from the auto industry had asked the Government for a stimulus package, including GST reduction on vehicles, for the sector which has been hit by an unprecedented slump in sales. 
 
The Society of Indian Automobile Manufacturers (SIAM) has thanked the Finance Minister for addressing the difficulties of the automotive sector by announcing specific measures to boost demand.
 
Mr. Rajan Wadhera, President, SIAM. Said, the industry appreciates that the FM has responded with a package of measures within two weeks of its consultation with the industry.
 
Affordability and availability of retail finance as well as finance for dealers was a major concern for the industry and the announcement have adequately addressed concerns on both the fronts, he said.
 
According to SIAM, the release of Rs 70,000 crore for PSU banks recapitalisation and Rs 20,000 crore for National Housing Bank will give banks and NBFCs enhanced liquidity in the system. Moreover, the linking of repo rate to interest rates charged for vehicle purchase would support lowering of EMIs for auto purchases, thereby boosting demand. 
 
Mr Wadhera said the removal of ban on purchase of vehicles by Government department and 15 per cent higher depreciation for all types of vehicles purchased before March 30, 2020 should also give a definite boost to vehicle demand in the short term, especially vehicles meant for commercial use. 
 
The deferment in revision of one-time registration fee until June 2020 is also a very positive step as the industry was reeling under the pressure of price increases and higher registration fee would have further impacted the demand negatively.
 
SIAM has also welcomed the assurance that a vehicle scrappage policy will be announced soon. 
 
The Industry has also lauded the FM’s clarification that both EVs and ICE vehicles will continue to be registered in future also. Further, the clear message by Finance Minister that BS-IV vehicles that are purchased till March 31, 2020 will all remain operational for their entire period of registration has cleared the air on this subject and consumers will no longer hesitate to purchase BS-IV vehicles, said Mr. Wadhera.
 
Mr Wadhera concluded by saying that the need to lower the vehicle transaction cost will be a very significant step and the industry will await for the next announcement of the Government on GST reduction, post-GST Council meeting.
 
Mr Ram Venkataramani, President, ACMA, said, the announcements made by the Finance Minister are indeed “very assuring and welcome”. He hoped that measures to improve liquidity and deferring of enhanced vehicle registration cost will revive the ailing sales in the auto sector. “That apart, enhanced depreciation of 30 per cent until March 2020 will motivate institutional sales of vehicles. Further, removal of ban on purchase of new vehicles by Government will also help reduce the current pileup of inventory”, he said.
 
Mr Ashish Harsharaj Kale, President, FADA, said "All our points of concerns and suggestions have been listened to seriously and most have been acted upon by the FM”. He said the announcement of BS-IV vehicles being operational for the entire registration period is will clear the confusion which was prevalent in many customers' minds. 
 
Mr Venu Srinivasan, Chairman, TVS Motor, said, “The promptness of this Government's response is reassuring for not just industry, but for the common man as well because it's putting liquidity into the market and easing the squeeze on the small and medium sector. While there are indications of a global slowdown, this Government has demonstrated its resolve to mitigate the impact of that in India through these measures. This is the stability and pro-activeness that industry wants.” 
 

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