‘Govt. looking at export sops, GST incentives for auto sector’

Gadkari promises to take up industry’s plea for cut in GST with Finance Minister

Updated - September 05, 2019 11:00 pm IST

Published - September 05, 2019 10:58 pm IST - NEW DELHI

Offering hope: Road Transport and Highways Minister Nitin Gadkari speaking at the SIAM convention. Kamal Narang

Offering hope: Road Transport and Highways Minister Nitin Gadkari speaking at the SIAM convention. Kamal Narang

Offering some solace to the crisis-hit auto industry, Road Transport and Highways Minister Nitin Gadkari on Thursday assured ‘full’ support from the government to help overcome the free fall in vehicle sales. He said the Centre was looking at steps, including export sops and GST incentives, to help create demand in the sector.

“As far as the present economic data is concerned, automobile sector is facing a slowdown because of the global economy... because of demand and supply. The government is with the automobile sector,” the Minister said at the 59th SIAM annual convention.

The Minister also clarified that the government did not intend to ban ICE (internal combustion engine) powered vehicles.

He, however, added that the government would promote the use of alternative fuels and electric vehicles to tackle issues of a high crude oil import bill and pollution. Thursday’s statement comes as a relief for the industry, given that it was Mr. Gadkari who had in 2017 asked car makers to move to electric or they would be “bulldozed” into doing it.

Mr. Gadkari also promised to take up the industry’s request for a GST cut with Finance Minister Nirmala Sitharaman. “The industry's demand for reduction in GST is understandable. I will take your suggestion [to reduce GST] to the finance minister... even if it can be done for a limited period of time. I will follow this up. This sector needs help at this time and that help should be in such a manner that it helps increase sales,” he said. Noting that the GST on electric vehicles had been reduced to 5% from 12% earlier, he said the government was mulling to extend the same benefit to hybrid vehicles.

Any decision on GST on automobiles would be taken up for discussion at the upcoming meeting of the GST Council on September 20. However, the industry is seeking an early solution as they fear that customers would defer purchases anticipating further reduction in prices.

Mr. Gadkari also said that his Ministry would award 68 road projects worth about ₹5 lakh crore in the next three months, which, in turn, would help generate demand for commercial vehicles.

SIAM president Rajan Wadhera sought introduction of a scrappage policy and a nodal Ministry for the industry, in addition to GST cuts. CII president designate and MD and CEO of Kotak Mahindra Bank Uday Kotak said that there was enough liquidity in the banking system to finance any form of vehicle.

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