December 3, 2023

In a time when auto sales have dropped, and consumers are nervous about buying new cars, especially with the Center’s focus on electric vehicles, Transport Minister Nitin Gadkari on Thursday said that the government is not planning to prohibit diesel and petrol vehicles.

The news could calm the nerves of automakers who are battling the biggest slowdown in recent years, resulting in numerous carmakers having to announce plant shut-downs and reductions in production. Particularly, Maruti Suzuki has announced to close its operation for two consecutive days during September at both the Gurugram and Manesar factories.

The announcement made by Gadkari is just one of many initiatives announced in the last few days to help boost the auto industry, which contributes 7% of the country’s gross domestic product.

The government is looking at the possibility of reducing tax on goods and services on diesel and petrol-powered vehicles to be in line with the electric car, Gadkari declared at an event organized by the Society of Indian Automobile Manufacturers (SIAM). Gadkari acknowledged that the auto industry is struggling and requires help.

SIAM has also pushed for an anti-scrapage policy, as well. The government seems expected to release one.

In order to boost sales of automobiles, which have been on the decline in the last 13 months, with sales in August falling by 30 percent, the government made it clear that all BS-IV vehicles will be allowed to operate until the final day of their lives. From April 1, 2020, just BS VI vehicles will be registered in the nation as it shifts to the cleanest fuel available in the globe. This transition has caused many consumers to postpone their buying decisions.

The problem of declining sales is compounded by insufficient liquidity and credit available in the market, particularly due to the strain on non-banking financial institutions. SIAM believes that, given that two-wheeler and tractor sales have fallen in August too, the measures proposed by the finance minister Nirmala Sitharaman in July remain ineffective.

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