While the auto industry is currently reeling under a consumption slowdown, Minister Nitin Gadkari said that slowdown is a part and parcel of life, and problems can be converted into opportunities.
While the auto industry is currently reeling under a consumption slowdown, Minister Nitin Gadkari said that slowdown is a part and parcel of life, and problems can be converted into opportunities, CNBC TV-18 reported. Speaking at the 59th SIAM Annual Convention, Nitin Gadkari said that the government is also worried about the slowdown but hopeful of the sector’s revival. Stating that NBFC crisis could have been one of the reasons to catalyze the slowdown, Gadkari added that the slowdown is also impacting employment potential as well as the growth of the country and hence needs immediate intervention.
In order to spur demand for automobiles in the country, the minister assured that he will urge Finance Minister Nirmala Sitharaman to reduce GST rate on automobiles. Meanwhile, auto body SIAM had raised concerns about the ongoing slowdown in the past. The industry body had also sought steps from the government, asking for an immediate reduction in GST rates and initiation of scrappage policy.
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The auto industry is seeing one of the worst slowdowns in several years with companies like Maruti cutting down on production. Maruti, which is the biggest carmaker in India, saw a sales slump of over 30% in the quarter. Nitin Gadkari also acknowledged that the auto industry is in immediate need of assistance.
However, reviving sales for automobiles could cost the government Rs 45,000 crore in revenues if about 10% GST rate cut is doled out, a Kotak report had said last month. The report suggested that the companies must look into self-help and not rely too much on government for rate cuts as the government has its own financial constraints. “The Indian automobile OEMs may want to consider price cuts to stimulate demand in case the government is unable or unwilling to reduce GST rates,” the Kotak Institutional Equities report had said.