Roots of the automotive industry for the reduction of GST, budget scrapping policy

CHENNAI: The car industry is emphasizing a scrapping policy and a 4% cut in GST as the main demands of the 2020 Budget. The sector that has been affected by the worst slowdown in 20 years also faces a series of safety and emissions regulations that will substantially increase the price of vehicles, which will affect the feelings of consumers even more.

“Old vehicles are a great source of pollution and only from April 1995 to March 2005 there is a group of 50 million vehicles that, if removed from our roads, will reduce pollution, save 10 billion liters of fuel and They will improve demand. The ministry has already given guidelines for scrapping centres but we need a scrapping policy with incentives where industry can also pool in,” said Rajan Wadhera, president, Society of Indian Automobile Manufacturers (SIAM), the industry apex body.

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The sharp decline in vehicle sales, particularly buses and trucks, has also affected the government's GST collection, so SIAM is pushing for the reduction of the GST to improve sales. With BS6 there will be a much larger collection of GST as vehicles will become expensive, but they will also affect demand, Wadhera said. We are asking the government to reduce the GST so that the price increase of the BS6 is neutralized and the collection of the GST is not affected, he added.

Industry is also seeking some tax benefits for personal vehicles. “The auto industry is willing to share its portion towards realising the scrapping policy and this would have a more sustainable impact on the environment. Another suggestion is to extend the income tax benefits available for electric cars to other vehicles particularly personal customers beyond professionals and companies,” said Naveen Soni , senior vice president of sales and service, Toyota Kirloskar Motor .

Meanwhile, on the side of electric mobility, automotive companies are also encouraging incentives. “The government should consider providing incentives to interested parties to obtain critical raw materials for the manufacture of EV batteries in India. This will allow a strong EV-centered ecosystem and will be beneficial for the long-term growth of this high-potential space, said Rajeev Chaba, president and MD, MG engine India.

Current investments for the local manufacture of lithium-ion batteries will take at least another 3 years to reach the market. Meanwhile, the government has imposed a 5% tax on the lithium-ion cell. Batteries comprise one third of the EV cost.

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