Speaking at the ACMA annual convention here on Friday, Minister of State for Finance and Corporate Affairs Anurag Thakur said the government had received several representations from various stakeholders, including automobile dealers, OEMs and car manufacturers, regarding the reduction in GST rate from 28 per cent to 18 per cent.
The industry has demanded that the GST should be brought down to 18 per cent to reverse the consumption slowdown.
The Minister asked the auto industry players to reach out to the State Finance Ministers as well as the decision on any change in GST can only be taken by the GST Council.
"Any rate cute in the GST needs to be first approved by the GST Fitment Committee and then by the GST Council. I request all of you to also reach out to State Finance Ministers, who are part of the GST Council... We are open to take it (rate cut proposal) to the GST Council, deliberate it there and most of the decisions are unanimously been taken in the previous GST Council meetings," he said.
The GST council's next meeting is scheduled in Goa on September 20.
He said that government is listening to the industry and at the same time taking quick policy decisions to address these concerns raised by various sectors.
Further, the minister called for the industry to re-align their strategy given that consumers preferences are changing.
Union Minister of State for Parliamentary Affairs and Heavy Industries & Public Enterprises Arjun Ram Meghwal, who also attended the event said that he expects rationalisation of tax rates levied on auto parts soon and that export incentives might be considered for the sector.
The automobile component manufacturers faces a unique tax structure as most of their products attract GST tax at 18 per cent, while some high-end parts attract a rate of 28 per cent.
He termed the auto sector's woes as minor and which will be settled very soon as the Centre is aiming to make India a $5 trillion economy.
The automobile sector is suffering sales downturn due to factors like high GST, farm distress, stagnant wages and liquidity constraints. Inventory pile-up and stock management of unsold BS-IV vehicles too have become a problem for the sector.
Consequent to the slowdown, the Finance Minister Nirmala Sitharaman had, on August 23, announced that government departments would be allowed to buy new vehicles.
In addition, automobiles purchased till March 31, 2020, can avail the benefit of additional depreciation of 15 per cent, with total depreciation up to 30 per cent.
Even BS-IV vehicles bought till March 31, 2020, would remain operational for their entire registration period.
Lately, all major OEMs consisting of passenger, commercial, two and three wheeler manufacturers have reported a massive decline in domestic sales.
Figures from the Society of Indian Automobile Manufacturers (SIAM) showed that industry which has recorded an overall decline of 18.71 per cent in off-take for July, the highest monthly sales de-growth in the last 19 years. August figures are still awaited
( With inputs from IANS )