Ball In Finance Ministry’s Court Over GST Rate Cut On Auto Sector: Nitin Gadkari
Nitin Gadkari, Union Minister for Road Transport and Highways. (Photographer: Anindito Mukherjee/Bloomberg)

Ball In Finance Ministry’s Court Over GST Rate Cut On Auto Sector: Nitin Gadkari

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Union Minister Nitin Gadkari on Wednesday said it is up to finance ministry, as well as state governments and the Good and Services Tax Council, to decide on a GST rate cut on auto sector. The industry has been seeking a tax relief to shake off the ten-month-long auto slowdown in India.

A vehicle scrappage policy, including for two-wheelers, is in the works and will be launched soon, the Minister For Road Transport and Highways added.

Gadkari’s comments came a week after he assured the auto industry that he would take up the issue of GST rate cut on cars to 18 percent from 28 percent at present.

"I have already discussed with the finance minister. But ultimately if the FM has to take any decision it must be in consultation with state finance ministers and GST Council," Gadkari said at the launch of Honda’s Activa 125 BS-VI scooter.

While maintaining that the ball is now in the court of the finance ministry, Gadkari said he is confident that the Nirmala Sitharaman-led ministry, in consultation with state governments, will take a positive decision.

Also read: Millennials, Not Taxes, Get Blame for India’s Falling Auto Sales

Commenting on the planned vehicle scrappage policy, Gadkari said a draft has already been prepared. "But there are still problems relating to various stakeholders. We need cooperation from the manufacturers as well as the finance ministry," he added.

"We (transport ministry) are ready with the process. My ministry is trying to get it (vehicle scrappage policy) cleared as early as possible, and I am confident that in the limited short time we would come to a conclusion and we will launch the policy."

The vehicle scrappage policy will apply to two-wheelers as well, he said, and "if the two-wheeler industry wants to suggest, anything we are going to listen to it with an open mind".

Acknowledging the prolonged auto slowdown in India, Gadkari said the reasons for the slump in sales could be myriad—from demand and supply issues to global economic slowdown and the business cycle.

He, however, exuded confidence that within the next 5-6 years, India will become a global manufacturing hub for automobiles. The industry is very important for India’s overall economic growth and employment generation, he added.

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