Auto-Industry Going Through Loss- R C Bhargava Blames Increase GST

The Indian automobile industry has taken a drastic slow-down in July due to the economic crisis prevailing in the country with a drop of 18.71 percent, leaving 15,000 workers jobless.

The banking sector has gone through severe paralysis due to the demand for safety features such as airbags and ABS to be introduced on new cars. The installment of these facilities has proven costlier.

In the last year, small cars have become 10-12 % more expensive. The bigger cars have gone up by large amount because the road tax on the bigger cars is higher,” says R C Bhargava. He goes on to blame the higher tax on petrol and diesel and an upward revision in road and registration charges by state governments for adding to the burden of car buyers.

The auto industry Siam has also made a similar claim to bring down the GST on vehicles from 28% to 18%. “The guy who rides the two-wheeler wants to upgrade to a four-wheeler but he is unable to do so in terms of his financial capacity,” the Maruti Chairman told TOI in an interview.

Bhargava also claims that it is not the structural change that has to lead to the decline in the demand of the auto industry rather it is due to factors such as stricter safety and emission norms enhanced insurance cost and additional road tax in around nine states.

The cost of an entry car has increased to around Rs 55,000 due to the cumulative effect of the factors including Rs 20,000 road tax in certain states. The banking sector is hesitant in taking a risk in terms of financing.

The Indian car buyer is not like the European or the Japanese car buyer. The per capita income here is around $2,200, china has around $10,000, and Europe about $40,000. How do you compare with those people? But when it comes to regulations, everybody in India says we must have the best regulations…you have to look at the affordability of a product considering the Indian level of incomes and not somebody else’s level of income.

He also raises concerns over “obscene salary” to top management hence there should be steps that are followed to make the society “much more equitable.”

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