Society of Indian Automobile Manufacturers (SIAM), an industry body representing all major vehicle and vehicular engine manufacturers in India, has welcomed the Aatmanirbhar Bharat package by the Finance Minister Nirmala Sitharaman and the focus towards MSMEs; NBFCs and the Agri-sector announced in the package but rues on no direct stimulus.
“The agri sector package announced under the package may benefit the auto sector indirectly in the medium term but the Indian automotive industry needed an immediate stimulus to boost demand, which has not happened,” held Rajan Wadhera, President, SIAM.
Indian automotive industry supports employment of more than 3.7 crore people and contributes to 15 per cent of GST amounting to Rs 1,50,000 crore every year. The sector was already facing an unprecedented challenge with 18 per cent degrowth last year.
As per an assessment made by SIAM on the impact of COVID-19 on demand for vehicles in the current financial year, the automobile sector could have a de-growth in the range of -22 to -35 per cent in various industry segments, for the year FY21, if the overall Indian GDP growth is at 0-1 per cent for FY 21.
Wadhera said that it is against this background that the industry was keenly looking forward to some direct fiscal measures which could have boosted demand for the auto sector and stop job losses.
He mentioned that SIAM has had several engagements with government of India at various levels, where specific suggestions were made for demand stimulus including reduction in base GST rates from 28 to 18 per cent for a limited period and an incentive-based vehicle scrappage policy, which would have made it a less painful revival and kickstarted the industry.
There is also an urgent need to support the dealers in terms of improving their liquidity and including them under MSME Act by changing its definition. The Industry would continue to engage with the Government and seek direct interventions for revival, concluded Wadhera.
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