GST rate could be reduced for vehicles as Prakash Javadekar hints at possibility

Union Minister Prakash Javadekar on Friday hinted at the possibility of GST rate cut for vehicles and hoped that the automotive industry will soon get some "good news".

The Heavy Industries Minister also shared that the proposal for the auto scrappage policy was ready and all stakeholders have provided inputs, therefore its announcement was likely "very soon".

Elaborating on the possibilities of the GST rate cut on vehicles segment, he said the details of the proposals are being worked out by the Finance Ministry and he is not privy to all the details.

However, Javadekar said, "naturally in a logical sequence, 2-wheelers, 3-wheelers, public transport vehicles, in that category only, and then 4-wheelers, in that order it should come. I hope that you will get some good news surely very soon".

The minister said he will definitely discuss the automotive industry's demand for Goods and Services Tax (GST) reduction with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.

"We may not agree immediately for reduction in GST but that is not a final no. There can definitely be a way forward which I also see, progress will be done," said Javadekar.

Two-wheelers are neither a luxury nor sin goods and so merit a GST rate revision, Finance Minister Nirmala Sitharaman had said at an industry interaction last month. She said a rate revision proposal would be taken up by the GST Council.

Two-wheelers currently attract 28 per cent GST.

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The GST rates are decided by a Council chaired by the Union Finance Minister comprising Ministers in-charge of Finance or Taxation of all the states.

He said the government is working with all stakeholders on ways and means to boost demand.

Addressing the 60th annual convention of auto industry body SIAM, the minister said "the automotive industry is important for Indian economy and we would like to support the industry by providing incentives for increasing its competitiveness, especially with a focus on exports".

Javadekar said a Champion export scheme is also on the anvil.

He said details of the Champions scheme for exports are being worked out and it is likely to provide benefits to companies for increasing their sourcing from India, compensate the cost disadvantage in logistics and also provide benefits to firms that have high export potential.

The Ministry of Heavy Industry had invited expressions of interest from state transport departments for the deployment of 5,000 electric buses last year.

"I have instructed that there are so many good Indian companies manufacturing (electric buses), so concentrate on Indian companies," Javadekar said.

The minister said the Centre was reviewing the national automotive mission plan, and assured the industry that it "will not experience supply side bottlenecks now because movement has been eased out and there will be no lockdown any further, as I hope".

Javadekar, who also holds the portfolios of Minister for Information and Broadcasting and Environment, Forests and Climate Change, said Covid-19 management rests mainly on containment zone management and more testing, and wondered how China has been able to contain the disease to one restricted geography.

"There are two countries of our size, China and India, and China surprisingly after Wuhan there is not a single patient anywhere so how this happens only China can know about it," Javadekar said.