GST cut, scrappage policy to revive commercial auto industry: Ashok Leyland

Reduction in GST rate and introduction of scrappage policy would help in reviving the commercial vehicle sector which has been facing headwinds for quite some time now, a top Ashok Leyland official said.

The Hinduja Group flagship company also expects the situation due to the current downturn in the industry, most recently due to the coronavirus pandemic, to improve gradually during the current fiscal.

"The answer is yes, it certainly will," Ashok Leyland MD and CEO Vipin Sondhi told PTI when asked if the GST rate cut on commercial vehicles would help in reviving the the sector.

"When you look at the commercial vehicle industry, it's core to the country, it is pretty much the core industry...to have it at 28% (GST rate) is something which the industry has put forth to the government in the past and now as well. Will it help? It will help, it could be one of the possible demand triggers," he noted.

The other trigger points could be introduction of a scrappage policy and more investment in rural India, Sondhi noted.

When asked about the sales outlook for commercial vehicle industry in the current fiscal, he said, "Fundamentally what we are seeing is that each segment of commercial vehicle industry will have its own trajectory."

The situation would depend on various factors like the impact of reforms initiated by the government and other factors like availability of liquidity at the right time, Sondhi said.

"I think every quarter will be better than the previous one and we will have to be ready," he added.

Auto industry body SIAM has been urging the government to reduce the GST rate on vehicles from 28 to 18%, and to introduce an incentive-based scrappage policy.

The government, on its part, has said it is working on a scrappage policy, but has so far not indicated if it would also look at lowering the GST rates on automobiles.