Industry Body SIAM To Ask Govt. To Reduce GST On Cars After Disappointing Sales In Past 6 Months

Indian automotive industry has seen substantial decline in sales over the past six months. The drop has been so steep that several of the auto majors like Maruti Suzuki India and Mahindra & Mahindra had to shut production at times to avoid piling up of inventory. In addition to this, several of the dealerships have also shut shop during this time.

As a solution to this, Society of Indian Automobile Manufacturers (SIAM), the apex lobby of vehicle manufacturers in the country has now decided to seek a reduction in Goods and Services Tax (GST) on automobiles. As per reports, the body would be asking for the revised GST to be 18 percent, down from the current 28 percent.

Rajan Wadhera, president, SIAM said, "We have sent our recommendations as an industry asking for the GST to be reduced to 18 percent from 28 percent because there have been many regulatory requirements that have come in the last two and half years which have pushed the costs up. This is why demand has come down.¡±

SIAM is planning to meet the government to discuss the proposal further, wherein it is expected to portray the ground reality of the current situation and that of post the new GST, if it is brought into effect.

(Representative Image: BCCL)

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The reality remains that the auto manufacturers have not seen any visible respite from the drop in sales, despite offering higher discounts. While the companies used to offer a discount of around 8 percent to the buyers on a unit, the current number has increased to as much as 15 percent.

Crucial timing

SIAM has now turned to the reduction of GST as the only way out of the problem. Another pushing factor for the involved bodies is the fact that the BS-VI emission norms are set to be in effect within a year¡¯s time. While many of the players are ready with their BS-VI compliant vehicles, they will have to sell their present inventory, including the predicted sales numbers, before it is brought into effect.

Another hit for the manufacturers is the recent mandate that directs them to install airbags and sensors on all the cars and SUVs, making them pricier. The same hike cannot be charged to the customers as well, meaning it is the companies bearing the additional cost of the components.