Indian auto industry expects to turn around with Modi Sarkar

As the new government is preparing to take over the reins of India, the country’s automobile industry is hoping with fingers crossed that the Modi Sarkar will help them turn their fortunes around. Indian auto industry continues its journey towards south with the passenger vehicles, commercial vehicles and three wheelers all posting de-growth with the exception of two wheelers. The latest report from SIAM shows that the sales of passenger vehicles have declined by 9.50% in April 2014 over the same month last year with passenger cars and vans dropping by 10.15% and 27.04% respectively. The utility vehicles were the only segment to post a growth of 0.27% in April 2014. Will the new government help in stopping the downward trend? Here are the expectations from the automobile industry.

Excise rate cut to continue: During the interim budget, it was announced that the excise rate cut and the industry hopes that this will be continued to attract more customers. In the last interim budget, the government announced excise duty cut from 12% to 8% for small cars, scooters, motorcycles and commercial vehicles. For SUVs, mid-sized and large cars, the cut was from 30% to 24%, from 24% to 20% and from 27% to 24% respectively.

Introduction of GST: The introduction of goods and services tax has been expected for quite some time now and the biggies in the automobile industry expect it will be implemented soon. If implemented, the GST will bring down the prices as the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. It is also expected to help build a transparent and corruption-free tax administration.

Lower interest rates: As most of the cars bought today are on loans, lower interest rates will only lead to better sales.

Maruti Suzuki India Chairman R.C. Bhargava has said that the priorities of the new government should be creation of more jobs, increasing the rate of growth of manufacturing and good governance.

General Motors India Vice President, Mr. P Balendran, expects that the excise duty cut will be retained in the forthcoming budget and the interest rates to decrease or remain the same.

Tweet from Mr. Anand Mahindra, Chairman and Managing Director, Mahindra Group: Congratulations Shri Modi, for your remarkable rise. India's impatience to rise has put you on top. May you fulfill these great expectations.

Tweet from Mr. Ratan Tata, Former Chairman of Tata Group: Mr. Modi's landslide victory echoes the people's mandate for strong leadership and clear policies for growth and prosperity for India.