Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

India’s automobile sector has suffered majorly during the pandemic which exacerbated the struggles of a sector that happens to be a major consumer of ferrous and non-ferrous metals. A parliamentary panel constituted to voice the concern of the industry has laid out plans and measures which include GST cut, subsidies for auto component manufacturing units, and calls for bolstering the e-charging infrastructures, among other measures.


The panel has called for a GST rate applicable on automobiles to be cut to 18pc from the current 28pc to stimulate demand. Manufacturers have had to overcome high costs while transitioning to BS-VI emission standards. The increased sale on the back of reduction in GST would cover up the loss in GST revenues, according to the panel. The auto industry has suffered a loss of Rs23bn ($312mn), states the report released by the panel


To ease car purchases, the panel suggested that the government should push repo-linked car loans so that the full benefits of the central bank’s interest rate cuts are passed on to the borrowers.


Electric vehicle (EV) charging infrastructure needs to be set up to boost EV sales, stated the committee. New automotive component manufacturing facilities should be established under the micro, small and medium enterprises (MSMEs) and a stimulus package for the same is recommended by the committee.


Major Original Equipment Manufacturers (OEM) have slashed production by 18-20pc due to a decline in vehicle sales. This has consequently hurt the auto component industry affecting MSMEs producing automobile parts. Also, several dealerships, approximately 286 dealers have shut shop since the pandemic has hit, noted the panel.


The report recommended strong government support for the auto sector which is going through a tough phase since last two years due to lower capacity utilization, risk of bankruptcy for MSMEs, job losses along with lower capex and investments in the sector.



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