The Indian government has assured the Society of Indian Automobile Manufacturers (Siam) that measures are being taken to boost the ailing auto sector. Several union ministers attended the ‘virtual’ 60th Annual Convention on September 4, during which scrappage policy, infra projects and role of railways were discussed in helping the auto industry.

 

Speaking on the occasion, Prakash Javadekar, minister for heavy industries and public enterprises said he would raise the auto industry’s proposal for a cut in Goods and Services Tax (GST) with the finance minister and the Prime Minister, as it requires the GST Council to consider the socio-economic impact of the decision. 

 

He also stated that the industry could receive some concessions to boost demand during the festive season. He informed that that the incentive-based vehicle scrappage policy is ready, but an announcement is yet to be made. Javadekar added that the Champion Export Scheme is also underway.

 

Piyush Goyal, minister of commerce and industry and railways, suggested that parent brands of automakers like Maruti Suzuki and Hyundai should reduce royalties for use of technology or brand name to boost local investment, reduce outflows and promote ‘Atmanirbhar Bharat’ campaign. 

 

Maruti Suzuki paid Rs38.2bn as royalty to its Japanese parent body Suzuki Motor in FY2020, while Hyundai paid Rs10.96bn to its South Korean parent company in the prior year. He pointed out that Indian companies should focus on quality control.

Indian Railways is also ready to slash freight rates to provide the the auto industry with affordable logistics option, the minister said. The government is trying to attain Free Trade Agreement (FTA) with the European Union (EU) to help the auto industry to improve competitiveness. 

 

He urged the auto industry to reduce the value of imports and substitute it with products manufactured in India, and to bring new technology into the country. The pandemic is expected to push Indians in to buying personal vehicles to avoid commuting in public transport to ensure hygiene standards.

While the auto industry is determined to boost exports and cut imports, Pawan Goenka, managing director and CEO, Mahindra and Mahindra, expressed concerns on unfavourable FTAS which are hindering India’s competitiveness. Indian auto industry imports Rs1tn worth of components, he cited. The Automotive Component Manufacturers Association of India (ACMA) and Siam are likely to come together to and work towards reducing imports by about half in the next four to five years. He also added that the auto bodies and steel ministry would reduce import of steel products like CRC and HRC, which in most cases, is due to domestic supply crunch.

 

The minister for road transport and highways, Nitin Gadkari, said several road infrastructure projects are in the pipeline, including 22 green Express Highways. Seven express highways are already under construction, including the Delhi-Mumbai Express Highway project which has a two-year completion deadline. In January 2021, Meerut-Delhi Express Highway, Delhi- Amritsar-Mathura, and the Bangalore-Chennai projects are going to open, said Gadkari. 

 

Gadkari urged the auto industry to focus on alternative fuel vehicles, like flex-fuel vehicle technology wherein ethanol can be blended with petrol and is popular in Brazil, US and Canada. A policy is being formulated wherein the auto companies with a net worth of over Rs2.5bn could open their own gas stations.

 

President-elect of Siam, Kenichi Ayukawa suggested that maximising production and increasing sales volume could help in generating tax revenue which can be put to use for funding welfare initiatives.

 

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