Government is now seeking suggestion on reviving Indian Economy. For the purpose, Finance Minister Nirmala Sitharaman spoke to representatives of the automobile industry in a meeting held on Wednesday. Apart from the automobile industry, Finance Minister reached to representatives of other sectors to understand their problems, as several important industries have shown a reverse to growth in the market.
Many key profiles attended the meeting with Sitharaman on Wednesday, giving proposals on lowering Goods and Service Tax (GST) and increasing depreciation rate as a solution to overcome the crux. They further articulated the immediate need for initiatives to help the sector to come out of the pit.
Major attendees in the meeting were RC Bhargawa (Chairman of Maruti Suzuki), Nirmal Mind (CMD of Uno Minda), Gurpratap Bopara (MD of Skoda India), Pawan Munjal (CMD of Hero Motor Corp) and the Presidents of three industries— SIAM, ACMA and FADA.
Statistics show the decline in the selling rate of the passenger vehicle by 18.42% in the month of April-June 2019. Further, in the group of passenger vehicles, the selling rate of cars and utility vehicles and vans have declined by 23.32 %, 4.53% and 25.66% respectively.
Surveys from the desks of Federation of Automobile Dealers Associations (FADA) depict that in India around 2 Lakh people have ceased their automobile dealership in the last three months. The companies believe that the GST rate of 28% in the automobiles is the cause of depressed sales and are expecting a reduction. On the contrary, Finance Ministry believes that the GST collection is already under par and further reductions may lead to the worst scenario.
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Automobile companies are demanding depreciation rates to go up by 15%. This may lead to, Firstly, the decline in the resale value, which will drive the customers towards replacing the car sooner. Secondly, insurance premium coming down from the second year. Thirdly, business claiming high business expenses, which in turn will give them high tax benefits.