| Minister of heavy industries and public enterprises Santosh Mohan Dev (right) with Sunil Bharti Mittal (centre), chairman of Bharti Enterprises, and Ravi Kant, vice-president of SIAM and MD of Tata Motors, in New Delhi on Wednesday. (PTI)
New Delhi, Sept. 5: A bailout plan is being prepared for car makers who have seen sales stumble this year because of rising interest rates.
The ministry of heavy industries has fired off a letter to the finance ministry seeking further cuts in excise duties on cars.
The excise duty on small cars is 16 per cent, while it is 24 per cent on utility vehicles, mid-sized and large cars.
“In the first four months of this year, the performance of the automobile sector has been lower than what we had envisaged...we are keenly watching the outcome in the second quarter. If need be, we will certainly intervene to sustain growth,” Santosh Mohan Dev, Union minister of heavy industries and public enterprises, told auto industry chieftains at the 47th annual convention of the Society of Indian Automobile Manufacturers (SIAM) here today.
According to data available, the passenger car segment grew by 13.03 per cent in the first four months this year, while the commercial vehicle segment grew by 2.06 per cent. The two-wheeler segment has actually decelerated while the performance of the three-wheeler segment has not been encouraging.
“We are told that among various sectors, the availability of credit to first-time buyers is a major constraint coupled with the increase in interest rates,” Dev said.
He said some segments had witnessed growth after new models were rolled out – and he suggested that others might want to follow the same example.
“If there is not enough demand in the domestic market, then please export,” he said, adding that the government wanted to incentivise efforts to turn India into a global hub for vehicle exports.
Dev said the government would consider offering tax breaks over a certain minimum volume of exports, as is done in Germany.
The minister said the government was finalising the implementation committee for the Automotive Mission Plan (AMP) which was released earlier this year.
“As compared to last year’s announcement of investment of Rs 11,000 crore, the figure, according to the latest available information, is over Rs 64,000 crore this year and I am told more announcements are under way. Yet, many of these investments are at the sub-optimum scale,” he added.