Union minister for heavy industries Prakash Javadekar on Thursday acknowledged that the Indian automobile industry needs help after meeting top executives of the sector to understand their concerns.
Union minister for heavy industries Prakash Javadekar on Thursday acknowledged that the Indian automobile industry needs help after meeting the top executives of the sector to understand their concerns.
"This is an industry that creates mass employment, is a major contributor to Goods and Services Tax (GST) and manufacturing GDP. We have to bring the industry back on wheels. Last year, the industry was impacted due to the phased migration from BS-IV to BS-VI," Javadekar said.
The minister has agreed to take up the automotive sector's concerns with different union ministries, state governments and even the Prime Minister's Office.
India’s automobile sector has been on a virtual standstill since the March 25. Production plants have been shut and dealerships have been closed too. The Society for Indian Automobile Manufacturers (SIAM) has pegged the losses at Rs 2,300 crore for each day of the nationwide lockdown. The industry is demanding an immediate 10 percent reduction in GST as a lifeline.
Speaking to CNBC-TV18 after the meeting, Rajan Wadhera, the president of SIAM, said, "The member OEMs are looking forward to re-open at the earliest in alignment with the government policy, after maintaining safety and best hygiene practices, while making efforts to restore supply chains. The one single biggest stimulus the Indian auto industry needs is demand generation for which GST reduction by 10 percent points is the prime requirement."
Sources privy to the developments told CNBC-TV18 that industry leaders have requested the government to look into demand and supply issues on priority. OEM’s have been repeatedly emphasising that components vendors are spread across states and any stoppage from even one state could make production difficult.
Industry veterans have requested the minister for heavy industries for a mechanism to enable sourcing of components from red zones. Representatives of auto companies also requested the department of heavy industries to extend the date for registration of BS-IV vehicles.
Earlier, the Supreme Court had allowed the registration of BS-IV vehicles till April 30, but the lockdown has made registration difficult in many parts of the country. "The minister was very receptive and noted all our concerns said an industry executive present at the meeting.
The industry has also requested the government to enable batch testing for up to 16 people at one time. Maruti Suzuki chairman RC Bhargava had recently told CNBC-TV18 that a batch testing protocol needs to be developed in order to restart production. He said large scale batch testing would considerably reduce the risk of restarting production.
Hero MotoCorp chairman Pawan Munjal has welcomed the government’s decision to allow graded relaxation for different sectors. In a statement, Munjal said, "While continuing to play its role in supporting the government through various means and measures, corporate India looks forward to a suitable stimulus package from the government that will give a boost to our economy."
The auto industry has also requested the government for an early introduction of an incentive based scrappage policy to boost demand. In an interview to CNBC-TV18, Vinod Aggarwal, the managing director and chief executive officer of Volvo Eicher Commercial Vehicles said the commercial vehicle has been the worst hit.
"The major requirement is to increase demand, which is very low. It will take time for demand to return. An incentive based scrappage policy, GST reduction, infrastructure push coupled with liquidity support will help create demand for more productive BS-VI vehicles," Aggarwal added.
Auto industry veterans Pawan Munjal, Kenichi Ayukawa, RC Bhargava, Vikram Kirloskar, Pawan Goenka and Rajan Wadhera were among those who attended the meeting.
First Published: IST