Auto industry seeks tax sops to drive sales

Last Updated: Wed, Sep 04, 2013 14:00 hrs

New Delhi, Sep 4 (IANS) Indian automobile industry Wednesday asked the government to ease taxes as part of the measures to reverse the slowdown in sales.

The industry players, who attended the Society of Indian Automobile Manufacturers (SIAM) annual convention here, voiced their concerns at the slowdown faced by the sector.

"The automobile industry is one of the highest contributors of revenue and employment in the country, and needs a more moderated tax and excise duty structure," SIAM president S. Sandilya said.

Sandilya said the sector needed a "more moderated tax and excise duty structure" to help pull the industry out of its slump.

SIAM represents close to 50 vehicle and engine manufacturers nationwide.

Heavy Industries Minister Praful Patel agreed that times were "challenging" for the industry and said: "There is genuinely a case for stimulus for the auto industry."

He said his ministry was discussing ways with the finance ministry and other government departments to provide a boost.

Patel said thare was a sense of urgency within the government to ensure that the sector was re-energised. "I would be happy to organise a joint meeting between the ministers and shareholders to develop an immediate and effective solution to rectify the problems faced by the sector."

The sector, which employs some 19 million people directly or indirectly, is grappling with high fuel and interest costs in an inflationary economy which is driving away first-time customers.

"The automobile industry is going through a challenging phase and there is an urgent need for government intervention with transparent and stable policies to ensure the growth of the sector," said Philipp von Sahr, president, BMW India.

Maruti Suzuki managing director and chief executive Kenichi Ayukawa said the automotive sector is linked to numerous different industries, including power and steel, and a decline in the sector could have "serious adverse effects on the economy".

"Government policies strongly influence the development of the automobile industry, and the government needs to incorporate policies that help to promote the industry, and, in turn, economic development," said Ayukawa.

The sales of domestic passenger car segment declined by 7.40 percent in July, with only 131,163 units sold from an off-take of 141,646 units in the corresponding period of 2012.

The off-take of heavy, medium and light commercial vehicles which are a key indicator of economic activity went down by 14.93 percent.

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