The auto industry is among the worst hit by the economic slowdown. (Representational Photo)
In a bid to revive the economy, Finance Minister Nirmala Sitharaman on Friday made a bunch of announcement to boost the growth. For the auto industry, which is facing its worst-ever slump, Sitharaman said that the government has decided to increase the vehicle depreciation to 30 per cent. The higher vehicle registration fee has also been deferred to June next year.
In another significant move to tackle the poor demand, the finance minister said that BS-IV cars purchased till March 2020 will be valid and BS-IV vehicles can be used till the registration period. She also said that the Centre will consider scrappage policy and will lift the ban on purchase of new vehicles for replacing all old vehicles by Departments.
While India’s overall economy, including the finance and manufacturing sector, is facing the downturn due to poor demand and several other policy-related issues, the auto industry is among the worst hit by the slowdown. Nearly 3,50,000 people have lost their jobs since April in auto sector, forcing companies to shut down their factories and axe shifts.
Facing the crisis, industry leaders had recently met the finance minister and sought a stimulus package, including GST reduction on vehicles. During the meeting, the auto industry leaders had broadly presented factors such as issues regarding availability and affordability of financing, increasing cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt demand.
Among the other big announcements to invigorate the growth, Sitharaman said that the government will withdraw enhanced surcharge levied on long and short-term capital gains and restored pre-budget position on surcharge on domestic investors.
She also said that the Centre will infuse Rs 70,000 crore into the Public Sector Banks upfront, while another Rs 5 lakh crore will be released in a phased manner. The credit support for the purchase of vehicles, houses and consumer goods have also been increased.