Automobile Sector Slowdown: Anand Mahindra Pitches For Cut In GST, Road Tax To Revive Sales

Referring to auto industry body Society of Indian Automobile Manufacturers (SIAM) estimates, Mahindra said that the slowdown has resulted in an 8 per cent loss in GST collections in the first six months of 2019.

The automobile industry has been vouching for GST rate cuts since long now. (File Photo/ Getty)

New Delhi: There is no denying to the fact that Indian automobile sector is reeling under some severe roadblock over the past few years. Decline of sales on a monthly basis has posed a big threat to the survival of the industry. Slump in sales have also resulted in massive job cuts with many companies forced to shut down factories for days and axe shifts. Several industry experts believe that the only way to revive the industry is a short term stimulus such as reduction in goods and services tax (GST). The automobile industry has been vouching for GST rate cuts since long now to boost demand and curate the increasing employment. Addressing the ongoing crisis in the automobile industry, Mahindra and Mahindra group chairman Anand Mahindra on Wednesday said that the current slowdown in the auto industry poses a larger threat to the government’s financial arithmetic, while suggesting short-term measures like GST cut or rollback of the increases in road tax and registration fees to catalyse consumption. While speaking to shareholders at company's 73rd annual general meeting (AGM), chairman of the Mahindra Group said, "We need short-term measures to catalyse consumption. I believe the government’s measures to push the auto industry towards change are sincere and far sighted. I can well understand the government’s hesitancy in looking at GST concessions." Referring to auto industry body Society of Indian Automobile Manufacturers (SIAM) estimates, Mahindra said that the slowdown has resulted in an 8 per cent loss in GST collections in the first six months of 2019. While speaking further, the automobile veteran also pointed out that in order to catch up with the GST collections of FY-19, the industry needs to grow at a rate of at least 7 per cent in the remaining eight months of FY-20. He also said that kickstarting the auto industry with a few short-term measures will serve a greater national purpose. Seeking support from both wholesale and retail financing, Mahindra said, “I would appeal to lenders to take a more supportive approach to the suppliers and dealers, who are the backbone of the auto ecosystem.” Auto industry leaders, earlier this week, 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. In a meeting with Finance Minister Nirmala Sitharaman, industry leaders, including Maruti Suzuki Chairman R C Bhargava, M&M President - Automotive Sector Rajan Wadhera, who is also president of SIAM, along with representatives from components sector body ACMA and dealers body FADA drew attention to the challenges, including job losses, faced by the industry. "Yes, we have asked for certain enablers for the auto industry and they have thought on it. I am very hopeful that there will be a stimulus package (for the auto industry) coming soon," Wadhera told news agency PTI. The government wanted to understand from the industry about reasons for the slump in demand and possible solutions to the issue, he said, adding that the heavy industries ministry was supportive.