In middle of a prolonged slowdown, the automobile industry has asked the government to take bold fiscal measures to revive the sector that has reported its worst-ever sales decline in two decades during 2019, sources said.
The introduction of BS-VI emission norms is a positive step to reduce emissions significantly but the initiative would lead to an 8-10 percent increase in vehicle cost, leading to enhanced GST collections for government. “However, this extra cost would lead to a fall in demand. As a win-win situation, we are requesting the government to consider reducing GST on BS-VI vehicles to 18 percent from the current 28 percent from April onwards,” an industry source said.
The decision-making power for GST reduction lies with the GST Council and is not related to the Budget directly, he added.
The auto industry is also scrapping duty on import of lithium-ion battery cells so that battery packs can be manufactured locally and progressively cell manufacturing can also be established in the country.