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Finance Minister Lays Out Plan To Revive Auto Industry in India

Finance Minister Lays Out Plan To Revive Auto Industry in India

Snapshot: Finance Minister of India, Nirmala Sitharaman has announced a number of measures to help curb the Indian auto industry’s worst slump in the last two decades.

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  • One-time registration fee deferred until June 2020.

  • BS lV vehicles purchased until 31 March 2020 will remain operational. 

  • Ban on purchase of new vehicles by govt departments lifted.

The auto industry in India is facing its worst sales in nearly two decades, and the government has announced a few measures to help revive it, as part of an overall plan to help the country’s economy recover. The Finance Minister, Nirmala Sitharaman, announced the measures in a press conference held for this purpose. 

The various departments of the government were told to put vehicle purchases on hold so far, but that instruction has now been reversed, meaning the auto manufacturers will receive orders from government departments that have delayed their vehicle purchases thus far. The rate of depreciation for these vehicles has also been doubled, for a total of 30 per cent. The finance ministry has also decided to postpone the implementation of the one-time vehicle registration fee until June next year. What it hasn’t done is implement the scrappage policy, which would also have boosted car sales. It hasn’t done that right now because it lacks the infrastructure for it. 

Auto Industy in India

Sitharaman also clarified a few other points that might have been unclear to the car-buying public at large. One, any BS lV vehicles purchased until 31 March 2020 will remain eligible to be operational for the entire duration of their registration. The government will also focus on the development of electric vehicles by setting up the infrastructure that pertains specifically to EV components and ancillaries. However, vehicles that run on fossil fuels will also be registered. 

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The government has offered these measures to help the automotive sales figures perk up, but it doesn’t seem likely that they will have any immediate impact. A GST rate cut, which the car manufacturers have been pushing for, would have given sales a welcome boost in the run-up to the festive season, which is traditionally when sales spike. 

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