Recommendation on the Automobile Sector- Post Covid 19

Disclaimer: The views are solely represented by The Council of EU Chambers. Mr. Sujan Roy, Tata Motors and Mr. Saket Hardikar, AIUT are the Chairman & Co-Chairman of the Automobile Committee.

Sr. No




Short term help with working capital support

We request that the auto industry including OEs, component manufacturers and Dealers) be extended a 4% interest subvention / subsidy for working capital / loan requirements for a period of 9 months post lockdown.

They should also be allowed a 20% additional overdraft (Interest free) on sanctioned credit limits for a period of 6 months post opening to support salary disbursements and other fixed expenses cash.


Priority sector tag for auto industry

We request that the auto industry should be included in priority sector lending so that both retail and wholesale financing can be made available easily.

The priority tag for the auto sector will allow banks to allot a certain portion of their funds to cater to the demand of the dealers as well as car buyers. If green-lighted, loans related to the auto sector will be disbursed with relative ease.


Immediate steps to enhance liquidity in the system

We request that the Government expedite release of all pending payments to vehicle manufacturers as well as contractors of highway and infrastructure projects against past procurement by Central Government and other agencies to increase liquidity in the system.

We also request for fast track disbursement of all government incentives and benefits to all industries.


Demand boosters

We request that GST should be reduced by 10% temporarily from current levels.

We also request a 50 percent rebate in road tax and registration charges.

We also request a 20 percent reduction in vehicle insurance charges to make buying experience more attractive.



Premium and mid premium car business appears to be frozen however there is sales in essential two-wheeler segment so we suggest a lower GST tariff for Two wheeler segment, currently both Four & Two wheelers have same GST tariff.


Extending depreciation benefits for FY21

We request that corporate depreciation scheme which was valid till March 31, 2020, be extended till FY21. Also, similar benefits be allowed to individuals for FY21 at an effective rate of 25% (WDV).


Scrappage policy

We request for an incentive-based scrappage policy for old cars similar to the cash for clunkers scheme followed in other countries to promote new car sales. It should be applicable not only for customers planning to buy an electric vehicle but also newer, more efficient petrol and diesel vehicles also.


Extension of FAME2 Initiatives

Current outlay of Rs. 10000 Crore needs to be doubled and the current outlay for charging infrastructure of merely Rs. 1000 Crore needs to be pegged at Rs. 5000 Crore.

FAME2 benefits should be made available for Private 4 wheelers because without private vehicles the scaling up of EV volumes, critical for development of the eco-system, localization and future sustainability, will be critically delayed.

Also, the current the 20 per cent subsidy cap has severely hampered adoption as the total cost of ownership is not favourable. For a limited period, the government should hike subsidy to 40 per cent which will prove to be very beneficial going by China’s example.



Higher fund allocation for renewal of Public Transport


We request for much higher fund allocation for diesel / CNG bus procurement by city, municipal and state transport undertakings, over and above the allocation for electric buses under FAME 2 scheme


Road tax

‘One Country One tax’ slogan got flourished a lot, still the taxation pattern in not uniform, this season is right time to implement the uniform pattern especially in road tax. Currently road tax is collected for 15 years and we recommend to break it in to 2 or 3 installments which will reduce the threshold to purchase a vehicle and making the commodity more affordable. Since ‘Vahan’ software is there to track the vehicle, both central and state government will have a direct track on the vehicle which makes it easy to collect the 2nd and 3rd installment in future. 


Enhanced Export Incentives

We request for export incentives under Merchandise Export Incentive Scheme (MEIS)

to be enhanced by 2% for every eligible slab

to be extended to exports where payment is received in Indian Rupees

announced for a 3-year period for policy stability so that manufacturers can make requisite capital investments under ‘Make in India’


Protection of Auto Industry

We request to suspend all upcoming mergers, acquisition as well as support to avoid immediate business closure of auto OE’s or MSME’s due to lack of production volumes / demands / fund unavailability / outstanding loan burdens or Labour problems at least for one year from now.


Task Force

Government and auto industry should establish a new task force to combat the impact of the coronavirus on the country’s automotive operations