The meetings the Finance Minister has been holding over the past few days continued with the latest one with the country‚Äôs automobile sector. The industry was represented by R C Bhargava, Chairman of Maruti Suzuki, Pawan Munjal, Chairman of Hero Group and Rajan Wadhera, President of the Society of Indian Automobile Manufacturers (SIAM), among others. The main demand put forward by the auto industry was to bring down the GST on cars to 18% from the 28% charged now.
The purpose of these meetings Nirmala Sitharaman has been holding is to learn directly from the different stakeholders in the economy on what they think the government can do to put the economy back on its growth trajectory and come up with the solutions within a short period of time.
The attendance at the meeting was quite broad-based with the issue of lack of easy credit for the automobile dealer as well as the customers who wish to avail loans to buy cars was also discussed. To address this, the ministers of state for finance, finance secretary, revenue secretary the Heavy Industries Minister Arvind Sawant were also co-opted and so were the officials from the road transport ministry.
It may be tough for the government to agree to a tax rate cut in the present circumstances. It has to be seen how the GST Council also reacts if the government does bring in a proposal.
The FM responded to their demand for tax reduction by mentioning that the matter will have to be taken to the GST Council and that she would see what can be done.
Meanwhile, Sitharaman has also asked the three industry bodies, the SIAM, the Auto Component Manufacturers Association (ACMA) and the Federation of Automobile Dealers Associations (FADA) to send in their representations highlighting the issues they are facing in their respective businesses. The associations have said they will do that within a week. One more round of discussions with them will then be held by the Minister herself or officials after the representations have been studied at the government level.
The automobile sector has witnessed a 12.35% drop in the sales of automobiles, all categories put together, in the April to June quarter of 2019. The numbers were 69,42,742 units in 2018 and 60,85,406 units this year. These figures have been released by SIAM.
Loss of jobs has been another factor highlighted by the industry. The figures quoted are 1,200 from Maruti and 700 from Honda Motorcycle and Scooters. The component industry has been claiming its members have been worse affected with 8,000 to 10,000 people being out of work as reported by ACMA. It is reported that some 300 dealers closed shutters across the country due to the recession in the industry.