Mumbai: Anand Mahindra, chairman Mahindra & Mahindra (M&M), has urged the government to take a few short-term measures for reviving the automotive industry including revising the goods and services tax (GST) or removing the cess, and by rolling back the hike in road tax mandated by state governments.
“The most obvious and welcome first aid would be some temporary relief on the GST front, either by modifying the slabs, or, if that is not possible, by removing the cess. Another suggestion would be a re-look at the registration fees, which have gone up very substantially and a roll back of the increases in road tax mandated by state governments after the introduction of GST. I’m hopeful that these few actions along with the traditional post monsoon revival will set us back on track and positively impact the economy," Mahindra said.
He, however, said that he understood the government’s skepticism on giving GST concessions. “I can well understand the government’s hesitancy in looking at GST concessions. But there is a paradox here. The auto industry contributes revenues of upwards of ₹180,000 crores to government treasuries. The paradox is that while the government needs to be lauded for its fiscal responsibility, the current slowdown in the auto industry poses a greater threat to the financial arithmetic."
Highlighting the impact of auto industry slowdown on government’s tax collection, Mahindra, quoting Siam estimates, said, “The slowdown has resulted in an 8% loss in GST collection in the first six months of 2019. Just to catch up with the FY19 GST collections, the auto industry will need to grow at a rate of at least 7% in the remaining 8 months of the FY20."
On liquidity crunch, difficulties in raising loans, and the cut in repo rate by the Reserve Bank of India today, Mahindra urged that the auto industry needs lending support for suppliers as well as the dealers.
“On the resource side, we need support for wholesale and retail financing. On this front, I think all the right steps are being taken. The rate cuts necessary for revival have been put in place and the future looks brighter for our stressed NBFCs. I am confident that these measures will bear fruit, creating greater liquidity for NBFCs, which will ultimately make its way into the hands of the consumer. I would appeal to lenders to take a more supportive approach to the suppliers and dealers, who are the backbone of the auto ecosystem," he remarked while speaking at the 73rd annual general meeting (AGM).
Mahindra, who backs the government push on electric vehicle (EV) adoption, said making India the global manufacturing hub of EVs is “a clear and achievable goal."