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Won't count too much on GST reduction to boost demand: M&M's Pawan Goenka

Won't count too much on GST reduction to boost demand: M&M's Pawan Goenka

Won't count too much on GST reduction to boost demand: M&M's Pawan Goenka
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By Parikshit Luthra  Sept 7, 2020 9:35:01 PM IST (Updated)

India's auto sector has been facing major disruptions due to COVID-19 since March this year, which came at the back of two consecutive years of de-growth.

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At the annual convention of Society of Indian Automobile Manufacturers (SIAM), industry veterans pitched for a GST cut and a scrappage policy, stating that the auto sector was going through one of the toughest periods in history.
Heavy Industries Minister Prakash Javadekar said that he would take up the auto sectors demand for GST reduction with the FM and PM and a global champion's scheme was on the anvil.
Pawan Goenka MD & CEO of Mahindra & Mahindra who attended the event said, "Given the current fiscal situation that the government has, no matter how much we justify it saying that the increased volume will offset for GST reduction per unit, I think the government is going to find it very difficult to reduce GST for automobiles. Clearly if they do it for one sector there will be many others who are waiting in the wings for GST reduction.
"So I am not going to count too much on GST reduction as a way to revive demand. However there are many other levers that can be pulled right now to help in demand creation. One of them is to make money available at a lower cost to the consumer because finally what matters is the EMI and not what the retail selling price is. GST rate reduction would be nice, I would love it if it happens but I am not going to count on it to happen."
Speaking about retail financing he added, "Right now the demand is outpacing the supply except in the medium and heavy commercial vehicle segment which is completely on a halt mode. Also what is a very good news is that there is no constraint today on retail financing except for the rate that I spoke about. There is no constraint today on the working capital that our suppliers are having or working capital that dealers are having. So the sector today is in a much better shape than what anyone would have thought 2 or 3 months ago both in terms of demand and also in terms of supply."
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