India’s auto sales in downturn - GulfToday

India’s auto sales in downturn

India-Auto

Workers on the assembly line at the Hyundai Motor India plant at Kancheepuram district in Tamil Nadu. Reuters

The Central government might soon call a meeting with automobile industry stake-holders to discuss measures to arrest the continuous decline in the sector’s sales, sources privy to the development said.

The sales downturn is expected to have a drastic impact on the jobs market and the FDI inflows into the sector.

In recent days, senior officials from various ministries have held a range of discussions on the issue to come up with measures to arrest the sales decline.

According to sources, the Central government might bring in a proposal to lower GST rate on automobiles which is currently in the highest 28 per cent tax bracket. Alternatively, the cess over GST slab rate applicable on automobile may be lowered.

“Other incentives are also on the cards to boost liquidity that will aid sales. Scrappage policy is another step in this direction and the government might call a meeting with all the stake-holders soon to discuss these urgent steps.” The development comes after the ongoing sales slowdown showed little signs of abating. Apart from the slowdown, a weak monsoon and liquidity constraints have hampered sales. The automobile sector has been impacted the hardes  among major manufacturing sectors due to a consumption slowdown and the weak monsoon might just accentuate this trend.

Industry insiders opined that the slowdown is a culmination of high GST rates, farm distress, stagnant wages and liquidity constraints.

Figures from the Society of Indian Automobile Manufacturers (SIAM) showed that domestic passenger car sales in June went down by 24.07 per cent to 139,628 units.

Indo-Asian News Service