The Federation of Automobile Dealers Associations (FADA) has submitted a detailed representation to the Reserve Bank of India (RBI), seeking key policy reforms to enhance the ease of doing business in the automobile retail sector.
In a letter addressed to RBI Governor Sanjay Malhotra, FADA highlighted the sector’s significant role in the Indian economy, contributing ₹9 lakh crore annually and employing over five million professionals across 30,000 retail touchpoints.
The recommendations cover nine priority areas, including stricter enforcement of repo rate transmission by private banks, uniform implementation of MSME lending benefits, extending the CGTMSE collateral-free loan scheme to dealerships, and discontinuing direct incentive payments to dealership staff.
Other suggestions include recalibrating auto-loan risk weights, classifying rural vehicle financing under Priority Sector Lending, rationalizing digital transaction fees, and improving credit access to accelerate electric vehicle adoption.
Citing a modest 2% growth in vehicle volumes during the first half of FY26, FADA has also proposed the creation of an RBI-led Auto-Retail Working Group and called for closer inter-ministerial collaboration to unlock growth opportunities in India’s still under-penetrated vehicle market.
