SME Times News Bureau | 05 Sep, 2019
A million contractual manufacturing jobs are at
risk due to the consumption slowdown, Society of Indian Automobile
Manufacturers (SIAM) President Rajan Wadhera said, in New Delhi on Thursday.
The slowdown has forced the value-chain operators across the automobile
industry to reduce production and downsize workforce.
Speaking at the SIAM annual convention, Wadhera said, "Till now, 15,000
contractual manufacturing jobs have been lost and another million are at the
risk, if the slowdown is not reversed."
"The automotive industry accounts for almost 50 per cent of manufacturing
gross domestic product (GDP), 15 per cent of goods and services tax (GST) and
employees 37 million people directly and indirectly," Wadhera said.
The automobile industry has been hit hard due to slowdown, caused by several
factors, like high GST rates, farm distress, stagnant wages and liquidity
The automobile retail has witnessed around 200,000 job losses. A similar number
is expected to have lost jobs in the ancillary industries.
Wadhera reiterated the demand for lowering of GST on automobiles from 28 per
cent to 18 per cent and highlighted the need for a single nodal regulatory
ministry for the industry.
Meanwhile, Union Minister Nitin Gadkari said the Central
government is expected to award major road infrastructure projects besides
taking a call on a key policy decision on vehicle scrappage to arrest the sales
downturn being faced by the Indian automobile industry.
Accordingly, the government is expected to award 68 projects worth Rs 5 lakh crore
in the coming months, which include expressway development.
The Minister of Road Transport & Highways and Micro, Small and Medium
Enterprises was speaking at the annual convention of the Society of Indian
Automobile Manufacturers (SIAM) held here on Thursday.
According to Gadkari, these new infrastructure projects will generate demand
for automobile construction equipment. Besides, the Minister also said that the
government has no intention to ban petrol and diesel fuelled vehicles.
"I also want to clarify that though there have been talks that the
government is planning to ban petrol and diesel vehicles, we are not going to
do anything like that," Gadkari said.
The Minister acknowledged the industry's demand for reduction in Goods and
Services Tax (GST) rate on petrol and diesel vehicles, especially considering
the forthcoming increase in prices due to the introduction of BS-VI norms.
"Even if GST is reduced for some time, it will help the sector to increase
vehicle sales," Gadkari said.
"GST on electric vehicles has been reduced from 12 per cent to 5 per cent.
I will propose to the Finance Ministry to make the same benefit available for
hybrid vehicles," he added.
In addition, Gadkari assured the industry that the government is considering a
scrappage policy for old vehicles.
At present, the sector suffers from a sales downturn due to several factors
like high GST rates, farm distress, stagnant wages and liquidity constraints.
Besides, inventory pile-up and stock management of unsold BS-IV vehicles have
become a problem for the sector.