Still In Talks With PMO On What Steps To Take: Finance Minister On Auto Sector's Revival

Following the auto industry's request made to the Government to help revive the auto sector, Finance Minister, Nirmala Sitharaman has now said that they are still in talks with PMO (Prime Minister's Office) on this matter. Sitharaman said that the finance ministry and the officials at PMO are discussing the situation and one once the talks are over, the government will figure out what remedial steps are to be taken. The Indian auto sector is currently facing what could be the most vicious slump in two decades. The economic downturn that the industry is facing has bigger implications than just falling sales numbers as over 10 lakh jobs throughout the auto and its ancillary industries are at risk.

Also Read: Indian Government Working On A Revival Plan For Auto Industry; 10 Lakh Jobs At Risk

Speaking to reporters about the about a revival roadmap that her ministry is planning to unveil, the Finance Minister said, "Since Monday, I have met five different groups representing banks and financial institutions, SMEs, industries and automobiles and listened to their problems. We are analysing what steps should be taken now." Nirmala Sitharaman also added, "We had a meeting with Prime Minister Narendra Modi on the economy."

The slowdown comes at a time when the industry is gearing up to meet the upcoming emission and safety norms

Also Read: Auto Sales Hit Rock Bottom In July 2019

Addressing question about whether the government will announce a stimulus package, the Minister said, "I have not talked about any stimulus package, and whatever appearing in a section of the media is not given by me... Discussions are going on about what steps should be taken and we will announce them when we are ready."

Also Read: SIAM Demands Immediate Reduction In GST Rates From Government

The slowdown comes at a time when the industry is gearing up to meet the upcoming emission and safety norms. Carmakers and component makers have together invested about Rs. 80,000 crore for the BS6 transition and if the sales don't pick up, the industry may find it difficult to recover the invested capital. As a result, carmakers may consider increasing prices in a bid to sustain margins which could make the situation even worse, given that the consumer sentiments are already down.

Also Read: Maruti Suzuki Chairman Expects Government Intervention To Fix Auto Crisis

Overall economy slowdown due to liquidity crunch and low credit availability in the past couples with an increase in the prices have taken a tremendous toll on auto sales and SIAM has requested a temporary reduction in GST rates on passenger vehicles and have asked to charge them under the 18 per cent bracket instead of 28 per cent at which they are currently charged.