Sops to the auto industry unlikely

The government may be unlikely to offer Goods and Services Tax (GST) rebates to the automobile sector. The government justifies this by stating that the auto industry was slow in their response to the consumers demand on BS-VI. 

Bharat Stage Emission Standards (BSES) refer to the emission standards that were put into place by the Indian government. On 15th November 2017, the government put in place the updated standards in the form of BS-VI. 

The automobile sector has mounted its hope on the Supreme Court to extend the deadline beyond April 1, 2020, for introducing cleaner fuel.  This delay in adopting the new emission standards has resulted in further loss in demand. The consumer feels that purchasing vehicles with the older emission standard will lower their resale value. 

Also Read: How is the repo rate linked to home loans and auto loans?

Another factor that may have affected the demand is that consumer today are looking for cleaner alternatives. The delay in adopting the BS-VI standard by the automobile sector is just another way of delaying the transition to electric vehicles. With mounting support from the government for the introduction of electric vehicles consumer look forward to acquiring them since they too feel the pinch of global warming. 

Additionally, the government also fears that sops to the automobile sector may lead to other sectors demanding similar rate cuts, a move the incumbent government cannot afford. It is safe to say we can expect minimal to no rate-cuts in the coming months since the government is already reeling under the pressure of deficit in the revenue.  Nonetheless, the automobile sector is still pushing for a tax cut so that it can get the necessary stimulus. 

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