SIAM says auto sector left out in government's economic stimulus package
Auto industry body, Society of Indian Automobile Manufacturers (SIAM), on Monday said the "Aatma Nirbhar Bharat" economic package has left out the auto industry, which is in need of an immediate stimulus to "boost demand and stop job losses".
SIAM said it had several engagements with the government at various levels and was looking forward to some direct fiscal measures for the auto industry from the Centre in the ₹20 lakh crore stimulus package.
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While welcoming the focus towards MSMEs, NBFCs and the agri sector in the "Aatma Nirbhar Bharat" package, SIAM President Rajan Wadhera said, "The agri sector package may benefit the auto sector indirectly in the medium term but the Indian automotive industry needed an immediate stimulus to boost demand, which has not happened".
He said the Indian automotive industry supports employment of more than 3.7 crore people and contributes to 15 per cent of GST amounting to ₹1.50 lakh crore every year.
The sector was already "facing an unprecedented challenge with 18 per cent degrowth last year" and as per an assessment made by SIAM on the impact of Covid-19 on demand for vehicles in the current financial year, the sector could have a decline between 22 per cent and 35 per cent in various industry segments, if the overall Indian GDP growth is at 0-1 per cent for FY 21, Wadhera added.
"It is against this background that the industry was keenly looking forward to some direct fiscal measures which could have boosted demand for the auto sector and stopped job losses," he said.
Stating that SIAM had several engagements with Centre at various levels, where specific suggestions were made for demand stimulus, including reduction in base GST rates from 28 per cent to 18 per cent for a limited period and an incentive based vehicle scrappage policy, he said these measures "would have made it a less painful revival and kick-started the industry".
"There is also an urgent need to support the dealers in terms of improving their liquidity and including them under MSME Act by changing its definition. The industry would continue to engage with the government and seek direct interventions for revival," Wadhera said.