Sitharaman pushes car sales by lifting ban on govt purchases

The finance ministry on Friday announced slew of measures to bring relief to the automobile sector, which is facing the worst slump in passenger vehicle sales in nearly two decades due to a variety of factors, including higher ownership costs, liquidity crunch as well as job cuts.

To boost demand, the government will lift the ban on purchase of new vehicles by government departments. Besides, a vehicle scrappage policy is being worked out to arrest falling sales. The policy, currently being formulated by the transport ministry and the finance ministry, is expected to encourage customers to opt for new purchases, backed by government incentive, in lieu of their old vehicles. The final call will be taken by the Prime Minister's Office (PMO).

Besides, the proposed increase in registration fee as well as renewal of registration fee of petrol/diesel cars have been deferred till till June 2020.

Last month, the road ministry proposed higher registration fees for vehicles, such as ₹2,000 for renewal of registration of motorcycles, currently at ₹50. In the case of three-wheelers, the government proposed a higher fee of ₹5,000, against the current ₹300.

Sitharaman said BS IV vehicles purchased till 2020 will remain operational for the entire period of registration, allaying fears of automakers as well as buyers that such vehicles will cease to ply on the roads.

To tackle vehicular pollution, the government had asked automobile companies to move to Bharat Stage –VI (BS-VI) emission norms from April 2020.

Besides, the government will focus on setting up of an infrastructure for the development of automobile components, including batteries for export, Sitharaman said.

The auto industry contributes more than 7% to the country’s gross domestic product, close to 49% of manufacturing and employs around 50 lakh people.

Also read: Higher surcharge on gains from equity withdrawn for foreign, domestic investors