A million contractual manufacturing jobs are at risk due to the consumption slowdown, Society of Indian Automobile Manufacturers (SIAM) President Rajan Wadhera said on Thursday, September 5.
“Till now, 15,000 contractual manufacturing jobs have been lost, and another million are at risk if the slowdown is not reversed,” Wadhera told the media.
With the industry to move to BS-VI emission norms from April next year, automobile makers are afraid of an increase in price amid an economic slowdown.
The slowdown in the automobile industry is a matter of concern for the government since it affects job creation and government revenues.
Amid the slowdown, companies have claimed they have taken the necessary steps to deal with the year-long slowdown and that consumers are holding back purchases because of an expected cut in taxes.
Passenger vehicle sales have gone down to their lowest in nearly two decades, due to higher ownership costs, lack of vehicle financing, farm distress and a slowing economy.
In the past, Finance minister Nirmala Sitharaman said that the government would look forward to reducing GST on automobiles. Automobiles currently attract the highest tax rate of 28%, apart from a cess.
The Union Minister for road transport and highways Nitin Gadkari has now assured automobile executives that the government will now consider reducing taxes on hybrid vehicles to improve sales. He also said that India would not ban cars running on either petrol or diesel, addressing concerns raised by automakers over growing focus on electric mobility.
Live from 59th SIAM Annual Convention – “Moving into a New Era of Auto Industry” https://t.co/cggreIeZfZ
— Nitin Gadkari (@nitin_gadkari) September 5, 2019
This announcement to reduce GST on hybrid vehicles will be a boost to Japanese carmakers such as Maruti Suzuki India Ltd, Honda Cars India Ltd and Toyota Kirloskar Motor Ltd who are investing in this technology before a shift to electric vehicles.
“Petrol and diesel vehicles will not be banned, and the government also does not have any intent to ban anyone. These vehicles need to attract less tax now as our intention should be to increase sales as the sector needs help at the moment,” Gadkari said at the Siam convention.
“I have also suggested to the finance and commerce ministers if we can provide some incentives for exports as well,” he added.
“In 2008 and 2013, demand went up from the day after excise duty was reduced. This time as well there will be an immediate impact on two, three and four-wheeler sales if there is a cut. The slowdown has come at a wrong time since we are about to shift to the Bharat VI emission norms. If we don’t get out of this slowdown before the transition, then we will be in trouble,” said Mahindra and Mahindra Ltd Managing Director Pawan Goenka.
“If the industry does not turn back to positive growth for the remaining part of the months of the fiscal year, we may see more layoffs,” he said.
Also, Read Income Tax Filings For 2018-19 Increase By 4%; Record Rs 5.65 Crore Returns Filed Till August 31
