Over the last six months, the automobile industry in India has noticed a significant drop in sales. The automotive business has declined to such an extent that some major automobile companies have even discontinued production at times so that there is no stacking of the inventory. Furthermore, many dealerships have also been stopped during this time.
To address this concern, the Society of Indian Automobile Manufacturers (SIAM) will now pursue a reduction to the Goods and Services Tax (GST) on automobiles. SIAM is the apex national body which represents all major vehicle manufacturers in India. According to reports, SIAM would be requesting the government to revise the GST to 18% (currently it is 28%).
The president of SIAM, Rajan Wadhera, mentioned that recommendations have been made requesting to bring down GST from 28% to 18%. This request was made since several regulatory needs have popped up in the last two and a half years due to which the costs have gone up, ultimately resulting in lesser demand for automobiles.
SIAM intends to meet the government officials to discuss the proposal in detail. SIAM plans to portray both the gravity of the present situation as well as what will happen in the future after the new GST is brought into effect.
The auto manufacturers haven’t been able to see any relief with regards to the drop in sales, in spite of offering significant discounts. Previously, companies used to give buyers around 8% discount per unit, and now this number has been revised to almost 15%.
According to a recent mandate, manufacturers have to install sensors and airbags in all of the SUVs and cars. This is another hit for the auto manufacturing units because the automobiles will get pricier after implementing this mandate. Also, this hike in the price cannot be levied on the customers as well, implying the fact that the companies will end up bearing the extra cost of the components.
Another pressing factor for the auto manufacturing units is the implementation of the BS-VI emission norms, which is supposed to go live in less than a year. Though most of the players are equipped with BS-VI compliant vehicles already, they still need to clear their current inventory (inclusive of projected sales numbers) before getting the BS-VI emission norms into effect.