The highly awaited scrappage policy and lowering of GST rates could play an essential role in reviving the commercial vehicle sector in India. The CV space has been facing a constant downward trend for quite some time now. According to a top official at Ashok Leyland, the GST rate cut and the scrappage policy will be beneficial in reviving the Indian CV space. As per the report, the firm expects the situation to improve gradually during the current fiscal that has been affected by the current downturn in the industry and coronavirus pandemic.
Ashok Leyland MD and CEO Vipin Sondhi told PTI, "When you look at the commercial vehicle industry, it's core to the country, it is pretty much the core industry, to have it at 28 per cent (GST rate) is something which the industry has put forth to the government in the past and now as well. Will it help? It will help, it could be one of the possible demand triggers. Fundamentally what we are seeing is that each segment of the commercial vehicle industry will have its own trajectory."
He also mentioned that the introduction of the scrappage policy will be another trigger point alongside more investment coming from rural India. He further stated that the situation will be based on different aspects like the impact of reforms initiated by the government and the availability of liquidity at the right time. He further added "I think every quarter will be better than the previous one and we will have to be ready."
Moreover, the Society Of Indian Automobile Manufacturers (SIAM) has been urging the Indian government to reduce the GST rate on vehicles from 28 per cent to 18 per cent. The auto industry body also has been asking the government to introduce an incentive-based scrappage policy. As of now, the government is working on the scrappage policy, however, there is no word if it would be reducing the GST rates on automobiles.