Union Minister Prakash Javadekar on Friday lent his weight to the automobile industry's demand for a reduction in GST rate to boost growth, saying he will discuss the need for a reduction in taxes with the Prime Minister and Finance Minister.
The heavy industries minister also said proposal for the auto scrappage policy was ready and all stakeholders have provided inputs, therefore its announcement was likely "very soon".
Elaborating on the possibility of GST rate cut for the vehicles segment, he said details of the proposals are being worked out by the finance ministry and he is not privy to all the details. However, Javadekar said, "naturally in a logical sequence, two-wheelers, three-wheelers, public transport vehicles, in that category only, and then four-wheelers, in that order it should come. I hope that you will get some good news surely very soon." He said he will definitely discuss the automotive industry's demand for a Goods and Services Tax (GST) reduction with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.
The minister said as the industry feels that "this GST reduction will ultimately benefit the government and you are not asking for this permanently, you are asking this for a period, and therefore I will definitely discuss this demand with the Finance Minister and all concerned, the Prime Minister also." "We may not agree immediately for reduction in GST but that is not a final no. There can definitely be a way forward which I also see, progress will be done," said Javadekar.
Two-wheelers are neither a luxury nor sin goods and so merit a GST rate revision, Finance Minister Nirmala Sitharaman had said at an industry interaction last month.
She had further said a rate revision proposal would be taken up by the GST Council.
Two-wheelers currently attract 28 per cent GST.
The rates are decided by the GST Council, chaired by the union finance minister comprising ministers in-charge of finance or taxation of all the states.
Javadekar said the government is working with all stakeholders on ways and means to boost demand.
Addressing the 60th annual convention of auto industry body Society of Indian Automobile Manufacturers (SIAM), the minister said "the automotive industry is important for Indian economy and we would like to support the industry by providing incentives for increasing its competitiveness, especially with a focus on exports." Javadekar said a 'Champion' export scheme is also on the anvil.
He said details of the scheme are being worked out and it is likely to provide benefits to companies for increasing their sourcing from India, compensate the cost disadvantage in logistics and also provide benefits to firms that have high export potential.
The Ministry of Heavy Industry had invited expressions of interest from state transport departments for the deployment of 5,000 electric buses last year.
"I have instructed that there are so many good Indian companies manufacturing (electric buses), so concentrate on Indian companies," Javadekar said.
The minister also said the Centre was reviewing the national automotive mission plan, and assured the industry that it "will not experience supply side bottlenecks now because movement has been eased out and there will be no lockdown any further, as I hope." Javadekar, who also holds the portfolios of information and broadcasting and environment, forests and climate change, said COVID-19 management rests mainly on containment zone management as well as more testing.
He also wondered how China has been able to contain the disease to one restricted geography.
"There are two countries of our size, China and India, and China surprisingly after Wuhan there is not a single patient anywhere so how this happens only China can know about it," Javadekar remarked.
SIAM President Rajan Wadhera said, "We now need more specific steps to boost demand in the sector, as the festive season is fast approaching. Some of the key asks include lowering of GST rates from 28 to 18 per cent across all vehicle categories and automotive components, an incentive based vehicle scrappage policy and taking concrete steps towards realising the vision of the Automotive Mission Plan."