The automobile sector in India faces a grim future and will require a number of measures to reduce the blow from Covid-19 and the national lockdown it has prompted across the country. This is what Federation of Automobile Dealers Association (FADA) has written in a letter to Prime Minister Narendra Modi dated April 12.
Founded in 1964, FADA represents 15,000 automobile dealers with 25,000 dealerships across the country.
In its letter to PM Modi, FADA has outlined the numerous challenges that the Indian auto industry, which had a tough 2019 in any case, now faces. "Covid-19 has come as a shock to all of us as the Indian auto industry was preparing for recovery in sales growth after 15 months of a downturn," it states in the letter. "A new normal growth rate is going to be set, post the Covid-19 which is projected to be far lower than the normal, under which we have been operating in recent times."
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FADA has urged the government for support to avoid a situation in which auto dealers will go out of business and livelihoods of thousands lost. The recommendations made include a reduction in GST, priority sector tag for the auto industry, grant of MSME extension to auto retail, among others. "To boost vehicle demand further, we request that Corporate Depreciation Scheme which was valid till 31st March’20 be extended till FY 2021," the letter further appeals. "Attractive incentive-based scrappage policy should be introduced immediately for all vehicles which are running on road prior to 2010. Salary of employees for the lockdown period should be paid through ESIC as this is a health pandemic and salary liabilities should be covered under the same by ESI."
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The letter, signed by FADA president Ashish Harsharaj Kale, further highlights that the immediate situation is extremely bleak if not supported.
Car sales fell drastically throughout the country in March which was mostly under lockdown to contain the Covid-19. April could be even worse with all signs pointing towards the lockdown getting extended. Factories are silent, dealerships are shut and people are at home. Audit firm KPMG recently predicted the short and medium-term outlook for the Indian auto industry to be extremely grim with new launches being pushed back.