Finance Minister Nirmala Sitharaman on Tuesday (September 10) claimed that the current slowdown in the automobile industry is due to several factors including millennials preferring to travel by app-based cab services like Ola and Uber.
The latest data released by the Society of Indian Automobile Manufacturers (SIAM) on Monday revealed that total vehicle sales have fallen by 23.55%, the lowest since the industry body started recording figures in 1997-98.
Briefing reporters in Chennai on the topic ‘100 days of bold initiatives and decisive actions taken by the government’, Sitharaman said that the automobile industry if now affected by BS6 norms and the mindsets of millennials, “who now prefer to have Ola or Uber rather than committing to buying an automobile, reported ANI.
She further said that the GST Council will take a decision on the demand of reduction in tax. Currently, automobiles are in the 28% tax bracket and the auto industry has been demanding to bring the sector in the 18% bracket.
The figures released by SIAM showed that only 18,21,490 units auto sales were recorded this August as against 23,82,436 in the year-ago month.
In August this year, domestic passenger vehicle sales slumped by 31.57% to 1,96,524 units while domestic car sales dropped by 41.09% to 1,15,957 units. Besides, total two-wheeler sales also declined by a record 22.24% to 15,14,196 units as against 19,47,304 units in the year-ago month.
The data further revealed that commercial vehicle sales were down 38.71 per cent in August while that of motorcycles fell by 22.33 per cent. Scooter sales too witnessed a slump of 22.19 per cent to 5,20,898 units as against 6,69,416 units in the year-ago month.
With prolonged slump in sales, automobile and component manufacturers have been seeking GST cut on automobiles to 18 per cent from 28 per cent to help the sector come out of a prolonged slump that has resulted in job losses. The next GST Council meeting will be held on September 20 in Goa.
Task force to boost investments
The Finance Minister further said that the government has set up a task force to boost investments in infrastructure projects and was in the process of identifying the sectors which needed funding from the Centre.
“Government spending has to be speeded up to boost consumption. The best spending (by government) will be on infrastructure. We have (already) announced ₹100 lakh crore and that is the amount which I think has to be speeded up for infrastructure related projects,” she said.
“I have appointed a task force to speedily identify the projects so that money can be front loaded,” she said. Sitharaman said the task force was in the process of identifying those projects which would receive the funding.
The task force, comprising secretaries from different ministries, other senior officials and the Niti Aayog CEO, would identify technically feasible and financially/economically viable infrastructure projects that can be initiated in 2019-20, she said.
(With inputs from agencies)