Union Minister of Road Transport and Highways Nitin Gadkari on Thursday said that the government had no plans to ban petrol and diesel vehicles. With the automobile sector reeling under a crisis, the minister also assured the industry of all the help it needs from the government, including discussion on the matter of reduction in Goods and Services Tax with Finance Minister Nirmala Sitharaman, PTI reported.

“It is your [auto industry’s] demand that there should be reduction in tax of petrol and diesel vehicles,” Gadkari was quoted as saying at the annual Society of Indian Automobile Manufacturers convention in New Delhi. “Your suggestions are good. I will take your message to the finance minister. The sector needs help right now to increase vehicle sales.”

In 2017, the minister had said that the automobile industry would “be bulldozed” if they did not push for electric vehicles. “There have been talks that government is planning to ban petrol and diesel vehicles,” Gadkari was quoted as saying on Thursday. “I want to make it clear that the government has no such plan. We are not going to do anything like that.”

Gadkari said that the government was planning a reduction in GST on hybrid electric vehicles, similar to the reduction for electric vehicles from 12% to 5%. He further added that he would discuss the possibility of providing export incentives to automobile makers like it was done in the sugar industry.

The automobile sector, worth nearly Rs 4.50 lakh crore, provided a lot of jobs, Gadkari noted, adding that exports had also gone up. “But the government is facing some problem,” The Indian Express quoted him as saying. “First among which is the cost of import of crude oil. The second is pollution and the third is road safety.” He said that companies should consider starting a non-banking finance company for lending to buyers.

Gadkari said that with the prevailing pollution problem, the automobile industry would have to shift towards using cleaner fuel. However, he claimed that the responsibility of reducing air pollution could not be given to the industry alone.

Gadkari said that the government would help the industry with 62 road projects worth upto Rs 5 lakh crore within the next three months. The minister said that this would help in driving up demand for commercial vehicles and that the government had already acquired 80% of the land required for the projects.

Confederation of Indian Industry president-designate Uday Kotak said that automakers should focus on exports to tackle the slowdown in the domestic market and stressed on the fact that a weaker rupee would make it more favourable, PTI reported. SIAM President Rajan Wadhera asked the government to consider setting up a single nodal authority for the industry, which presently operated under several ministries for various functions.

Crisis in the auto industry

The Indian automobile industry is facing a crisis, with 15,000 jobs having been cut in the sector in the last quarter and almost 300 dealerships having been closed down in the last 18 months. The decline in consumer confidence, coupled with the crisis in non-banking finance companies, have caused a steep fall in passenger car sales.

With Bharat Stage-VI emission norms coming into effect soon, prices of vehicles have also gone up since car manufacturers have to upgrade their products to meet the new norms. Sales in the automobile industry had recorded multi-decade lows as passenger vehicle sales fell 30.9% in July – the steepest decline in a month since December 2000.

Now, follow and debate the day’s most significant stories on Scroll Exchange.