Mahindra Group Chairman Anand Mahindra on Wednesday said lowering GST on automobiles would help the economy, stating that the auto industry has a huge multiplier effect on small companies and employment.
In a tweet, Mahindra echoed calls from the auto industry to reduce goods and services tax (GST) on vehicles amid a prolonged sales slump, with passenger vehicle sales recording the steepest decline in nearly 18 years in May when it dropped by over 20 per cent. "What we're all searching for is the 'Mt. Mandara' which can start the 'Manthan' of the economy & get it spinning faster. I'm biased, of course, but the auto industry is one such 'Mandara'. It has a huge multiplier effect on small companies & on employment. Lowering GST would help," he said.
He was responding to a tweet by automotive magazine 'Autocar Professional' in which Federation of Automobile Dealers Associations (FADA) ex-president John K. Paul was quoted as saying that reducing GST on vehicles will kick-start growth again in the Indian auto industry, which is the third-largest employer in the country.
Earlier this month, the Society of Automobile Industry (SIAM) had sought reduction of GST on all vehicles to 18 per cent from the current rate of 28 per cent in the upcoming Budget. The passenger vehicle (PV) sales declined for a seventh straight month in May to 2,39,347 units against 3,01,238 units in the year-ago month. In fact, barring October last year, when sales were up 1.55 per cent, PV offtake has been in the negative in 10 of the last 11 months.
The dip last month is the worst since September 2001, when sales had dropped by 21.91 per cent. All major segments, including two-wheelers and commercial vehicles, witnessed a decline in sales in May, SIAM had said.
Vehicle sales across categories registered a decline of 8.62 per cent to 20,86,358 units from 22,83,262 units in May 2018.