Home Views Editorial Auto Industry Needs Economic, Not Car, Electrification

Auto Industry Needs Economic, Not Car, Electrification

PM Modi tried to make the auto industry and others believe that his fleecing tax regime had nothing to do with the poor state of the sector

Auto Industry Needs Economic, Not Car, Electrification

Prime Minister Narendra Modi’s written address to the Society of Indian Automobile Manufacturers, as though pre-determined, completely missed the issue that the auto industry is facing for the past few years. In his letter to the SIAM, he pinned the blame for the sluggishness in the industry on its “old approach” while the new approach he waxed eloquent about would hardly rejuvenate this sector of the economy, as switching to electric cars would not only require new manufacturing facilities, another huge cost proposition for both makers and users, but also dump such technology on motorists that would not immediately serve their purpose as the science thereof is still at a fledgeling state. While getting the letter drafted, the prime minister might either have had no idea what Maruti Suzuki’s RC Bhargava and his compatriots were complaining about or he just does not care. Slated to climb a notch higher to become the third-largest in the sector in the world from its current position by 2026, the auto industry saw a 31% decline in passenger vehicles’ sales, a 17% fall in two-wheeler deliveries and a 26% drop in commercial shipments even before the Covid-19 pandemic struck, registering an overall 18.71% slump, the steepest since the year 2000. It is laughable to suggest the scenario would have been different if the vehicles were all-electric. In all likelihood, it would have been worse, with neither the infrastructure of recharging the batteries nor customers would be ready to get rid of their fossil fuel-driven vehicles so soon. The auto industry is complaining of excessive taxation and additions in expenditure. Rather than celebrating this sector for being a vehicle of growth — in no less measure the growth in employment, which used to be Modi’s expectation from the industry when he was the chief minister of Gujarat — the government has been treating it as a milch cow.

At every stage that a passes through from manufacturing to retail, including registration and renewal fees, the cost imposed by the state has risen manifold. Following the demonetisation of 2016-end, which had wreaked havoc in the auto industry, the government decided that cars would attract up to 28% GST, the highest slab. This was when the industry had spent a lot on conforming to the latest anti- standards already. Once employing 3 crore 70 lakh people, the factories had to shed workforce by way of removing 15,000 temporary labourers from the original electric manufacturers. Three hundred dealerships had to be scrapped in 2019, affecting 2 lakh jobs. When the prime minister imparts knowledge about how to conduct business in the ‘new normal’, he forgets also the fact that it was in 2020 when the Chinese virus struck that the auto industry revived, thanks to people’s wariness in making use of hired cabs, which they feared would carry fomites and also because traders needed to be more mobile when consumers were moving less to ensure their businesses do not sink.

It was certainly beyond the brief of auto industry heads to question why the government is socialist, but the media can certainly ask both the union and the state why their tax components nearly double the cost of petrol and and why the road tax is so high, why the government ‘punishes’ upward mobility of citizens by adding a sin tax to high-end cars in the form of higher registration fees. And then a new vehicle scrappage policy has arrived. If a clean environment was what the government wanted, why did it not facilitate engine swapping? For fleecing businessmen and consumers alike, this government buys votes by distributing freebies and doles. While ordinary citizens’ hard-earned money pays for cheaper LPG, Jan Dhan Yojana, Kisan Yojana, scheme etc, it’s the prime minister who claims credit for having a that bleeds for the poor. Meanwhile, what not only auto but also other industries, including the MSME, get from the press conferences of Finance Minister Nirmala Sitharaman is how to easily avail loans! But the letter from the prime minister to the SIAM has established once again it is not any colleague of his who must be accused of the rob-Peter-to-pay-Paul principle. The buck stops at 7 Lok Kalyan Marg, New Delhi.

0 0 votes
Article Rating
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments
Would love your thoughts, please comment.x

Support pro-India journalism