JOIN USAuto industry slowdown temporary: Economic Survey
The current slowdown that has hit the automobile industry in India is temporary, according to the Economic Survey 2019-20 that was presented in Parliament on Friday.
The survey said that the “temporary auto slowdown may be attributable to certain other reasons such as lack of credit, base effect (as in last few years auto sector has grown rapidly), and structural changes like adoption of newer fuel standards from BS-IV to BS-VI from April 20 etc.”
It further added that the fall in consumer demand also affected the auto industry. “The global slack in consumer demand affected industrial activity, which slumped in most of the major economies in 2019. In particular, global production in automobile industry fell sharply due to a decline in demand, which was caused by changes in technology and emission standards in many countries,” the Survey said.
It also said that the “GST rate structure on auto and auto parts has been discussed and debated significantly in last few months. Auto sector contributes significantly to GST revenue. Therefore, any change in GST rate of automobiles and parts will have a significant implication to revenue and compensation requirement. The GST rates on auto sectors has been discussed in the GST Council. The Council did not recommend any change”.
As a push towards electric mobility and promote purchase of EVs, from August 1, 2019, GST rate on all electric vehicles was reduced from 12 per cent to 5 per cent and of charger or charging stations for EVs from 18 per cent to 5 per cent. Hiring of electric buses (of carrying capacity of more than 12 passengers) by local authorities were exempted from GST, the Economic Survey also said.
In another move to promote EVss, Section 80EEB was inserted to the Act to provide deduction in respect of interest on loan taken for purchase of an electrical vehicle from any financial institution up to a maximum of Rs 1,50,000 subject to the condition that the loan has been sanctioned during the period beginning on the 01.04.2019 to 31.03.2023, it added.