Government Blinks, Announces Measures To Help Auto Sector

Announcing a slew of measures to help revive a flagging economy, the Union Finance Minister Nirmala Sitharaman has also kept the auto industry on her radar. FM Sitharaman has said that there will be multiple initiatives that will help boost the beleaguered automobile sector. The key measures announced include the promise that there will be efforts to reduce interest rates for auto and home loans. There is also a clear assurance that BS4 vehicles that can be purchased by consumers right up till the deadline - will have the complete run of their registration period. This means that all BS4 cars and bikes can be used and operated right up to the end of the tenure of their respective registration. The standard passenger vehicles registration has a 15 year duration (for diesel vehicles that stands at 10 years, but only in the National Capital Region or NCR). This also means that vehicles purchased on March 31 2020 - would be allowed to complete their registration, even though the BS6 deadline would have set in from the following day. Typically registration can take anywhere from 24 to 48 hours depending on what part of the country the vehicle has been bought in.

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Any decision on a revision on registration fees has put off till June 2020.  

A big worry for auto industry players was a proposal the government was considering for a hike in the registration charges themselves. Any decision on a revision on registration fees has put off till June 2020. There is another incentive which sees an additional 15 per cent depreciation to be allowed on all vehicles acquired until March 31 2020, raising it to 30 per cent. And finally the government has also lifted the ban on its own departments to be able to replace their old vehicles. This could lead to large orders which will provide a significant sales boost to the sector. The FM has also said that the government will take up the industry's long standing demand to introduce a vehicle scrappage policy - though no timeline has been announced for the same. There is however no plan to reduce GST, which means taxation rates on vehicles will remain unchanged.

The automobile industry has seen sales decline over an 18 month period. In July sales had crashed to alarmingly low levels, with the likes of Maruti Suzuki seeing a year-on-year sales drop of almost 36 per cent. The industry had put up a unified representation, appealing the FM to help it climb out of the hole it found itself in. The FM had heard the concerns of the auto makers, car/bike/CV dealers, as well as component suppliers at the time. And while a cut in GST topped their list of demands, the general reaction from across the industry is positive on the measures that have indeed been announced.



from NDTV CarAndBike - Latest News

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