The government's announcements to revive the auto sector has been well received by the industry
The automotive industry has hailed several initiatives undertaken by the government to ease the pain of the industry that is passing through a phase of deep slowdown. In an apparent move at acknowledging the tough times the auto industry is going through, Union Finance Minister Nirmala Sitharaman had announced that the proposed hike in registration of vehicles has been postponed till June 2020 besides apprising that all pending GST would be released within 30 days.
Further, the government made its stand clear on ICE and electric vehicles stating that both vehicles would continue to be registrated, thus allaying fears among ICE players over ICE vehicles being taken off the road in favour of electric vehicles. The government's moves to release the pending GST within 30 days will be a big boost to the automobile dealers, who have been reeling from the prevailing sales slowdown.
The government also intimated that any type of vehicle purchased from today to March 31st 2020, would be eligible for 15 percent depreciation over and above the existing 15 percent and thus the total depreciation is 30 percent. The government is working on coming up with a scrappage policy so that all road unworthy vehicles can be completely scrapped and the money of scrapped vehicles will be obtained in form of coupons with which the new vehicles will be bought,said Union Finance Minister Nirmala Sitharaman. In another significant step, the government has lifted the ban on purchase of new vehicles that is expected to spur demand.
The government's healing measures have been welcomed by the industry. The Society of India Automobile Manufacturers (SIAM) President Rajan Wadhera said the government has addressed the key concerns of affordability and availability of retail finance as well as finance for dealers.
The Automotive Component Manufacturers Association of India (ACMA) President Ram Venkataramani said the government's latest announcements will improve liquidity and added that the deferring of enhanced vehicle registration cost will revive the ailing sales in the auto sector.
Venkataramani stated that the enhanced depreciation of 30 % until March 2020 will motivate institutional sales of vehicles. The ACMA President said the lifting of the ban on purchase of new vehicles by the government will also help reduce the current pileup of inventory.