The Federation of Automobile Dealers Associations (FADA) has written to Prime Minister Narendra Modi seeking urgent measures, including complete waiver of interest on bank loans during lockdown, to help dealers stay afloat in the “extremely bleak” situation due to which lakhs of jobs are at stake.
“COVID-19 has come as a shock to all of us as the Indian auto industry was preparing for recovery in sales growth after 15 months of downturn. A new normal growth rate is going to be set, post the COVID-19 which is projected to be far lower than the normal. The current situation can lead to an existential situation for many of our members and their employees,” FADA president Ashish Kale said in the letter dated April 12.
The industry body, which represents around 15,000 auto dealers, sought complete waiver of interest on all categories of loans from banks and NBFCs for the lockdown period and an extension of 4% interest subvention/subsidy for working capital/loan requirements to companies for a period of nine months post the lockdown.
It added that the salary of employees for the lockdown period should be paid through Employees' State Insurance Corporation (ESIC) as COVID-19 is a health pandemic. FADA has also asked for grant of MSME extension to auto retail. “The subsidies and incentives received under the MSME division will provide much-needed relief to automobile dealerships which provide direct and indirect employment to lakhs,” it said in the letter also marked to various Union Ministers including Nirmala Sitharaman, Nitin Gadkari, Piyush Goyal and Prakash Javadekar.
Further, to boost automobile demand in the post-COVID-19 scenario, the industry body suggested a temporary reduction in GST, incentive-based scrappage policy and priority sector tag for 12 months till normalcy is restored.
FADA also pointed out that due to the prolonged sectoral slowdown, which led to closure of about 275 dealerships and at least two lakh jobs, dealers are already reeling under pressure.
Mr. Kale told The Hindu that manpower is one of the major costs for dealers, accounting for 40-50% of total expenses. “Each dealership on an average employs 70-150 people. We invest time and money in training them and will not like to lose them. The dealers operate on very thin margins.”
