Budget 2019 will be an interesting one as it will be presented by brand Modi 2.0 government and India’s first full-time women Finance Minister Nirmala Sitharaman at a time when there is a concern about the country’s economy. The Society of Automobile Industry (SIAM) has recommended that the Modi government must reduce the Goods and Services Tax (GST) on all vehicles from existing rate of 28 per cent to 18 per cent.
The suggestive GST cut in Budget 2019 would lead to a reduction in vehicle prices and this would spur demand, an industry executive was quoted as saying by PTI. As per the report, passenger vehicles sales witnessed their steepest decline in nearly 8 years during the month of April as weak customer sentiment, liquidity crunch, uncertainty before Lok Sabha elections 2019 and high product prices hit sales were identified as main reasons.
In its Budget 2019 wish list, the SIAM has recommended that the central government must initiate an incentive-based vehicle scrappage scheme which will lead to polluting, unsafe and old vehicles off the road gradually and help them get replaced with new ones. A pre-budget 2019 meeting was held between SIAM and the Union Finance Ministry officials in this regard.
During the meeting, SIAM recommended that, in Budget 2019, central government should increase the applied customs duty on fully imported commercial vehicles from the existing 25 per cent to 40 per cent. It also wanted the central government must reduce customs duty on semi-knocked down CVs from 25 per cent to 20 per cent. SIAM also wanted to reduce customs duty on CKDs (completely knocked down units) of all form of vehicles from 15 per cent to 10 per cent.
In the meantime, it has been reported that over one-fifth of the automotive dealers in India are expecting lesser earnings in the financial year gone by compared to the last year. This is because the overall domestic automotive industry saw a very slight increase of 5.1 per cent at 26,267,783 units in the fiscal ended March 2019 in comparison with 24,961,312 units sold in FY18, according to a report by SIAM.