SIAM is thankful to the Hon’ble Finance Minister, Ms Nirmala Sitharaman, for addressing the difficulties of the automotive sector by announcing specific measures to boost demand. The industry highly appreciates that the FM has responded with a package of measures within 2 weeks of its consultation with the industry, said Mr Rajan Wadhera, President, SIAM.
Affordability and availability of retail finance as well as finance for dealers, was a major concern for the industry and the announcement today have adequately addressed concerns on both the fronts. The release of Rs 70,000 crore for PSU banks recapitalisation and Rs 20,000 crore for National Housing Bank will give banks and NBFCs enhanced liquidity in the system. Moreover, the linking of repo rate to interest rates charged for vehicle purchase would support lowering of EMIs for auto purchases, thereby boosting demand.
The removal of ban on purchase of vehicles by Government department and 15% higher depreciation for all types of vehicles purchased before 30th March 2020 should also give a definite boost to vehicle demand in the short term, especially vehicles meant for commercial use. The deferment in revision of one-time registration fee until June 2020 is also a very positive step as the industry was reeling under the pressure of price increases and higher registration fee would have further impacted demand negatively.
SIAM also welcomes the assurance that a Vehicle Scrappage Policy will be announced soon. Industry is already in the process of establishing scrapping infrastructure in various parts of the country and the announcement of such a policy will certainly give a boost to large investments in this area. The industry will keenly await the release of the detailed policy as it would remove old and polluting vehicles from the road as well as support incremental demand generation.
Industry is grateful for the FM’s clarification that both EVs and ICE vehicles will continue to be registered in future also. Further, the clear message by Finance Minister that BS IV vehicles that are purchased till 31 March 2020 will all remain operational for their entire period of registration has cleared the air on this subject and consumers will no longer hesitate to purchase BS IV vehicles, said Mr Wadhera.
Mr Wadhera said that need to lower the vehicle transaction cost will be a very significant step and we will await for the next announcement of the Hon’ble Finance Minister on the GST reduction, post GST council meeting.