“Cash for clunkers’’ and a possible rationalisation in excise duty rates for passenger cars are some of the demands that the auto sector expects the Centre to fulfil during this year’s Union Budget.

During pre-Budget discussions with the government, auto sector representatives were asked to come up with ideas to get old vehicles off the roads as the Centre is keen on containing pollution in major metros. The focus during the meeting was on what vehicle makers could do to reduce pollution rather than on offering sops to the industry.

Therefore, a possible option would be for the Centre to offer incentives either in cash or through rate cuts for customers to trade in their old cars for new ones.

Toyota Kirloskar Vice-Chairman Shekar Viswanathan, said that “the government has been pushed into a corner. As per the Finance Commission’s recommendation, States’ share in taxes will go up to 42 per cent. So, it will look at all avenues, including the auto sector, to raise money.” But even if this means the Centre raises excise duty on cars, it will still not affect the demand as the economy is performing well.

He, however, said that once the GST kicks in, all the price increases will get rationalised. “The Modi government has been able to revive confidence and one must realise that the economy continues to do well,” said Shekar, who is on the board of Toyota Kirloskar.

Auto component maker Bosch India’s Joint Managing Director, Soumitra Bhattacharya, said he expects the government to bring in labour reforms which will enable multinational companies set up manufacturing units in India on a large scale. “We look forward to some practical reforms that will help in productivity improvement.”

At the same time, the industry is looking forward to government support to achieve $200 billion turnover, as outlined in the Automotive Mission Plan, 2026, Bhattacharya said.

Public spending

Volvo India managing director Kamal Bali said nothing short of “pump priming” of the economy will help. He said public spending should be a major thrust area for the government. “The government can take a 20, 30 BIPs increase in fiscal deficit and may be 3.9 per cent could go up to to 4.2 per cent (of GDP) and declare we will go ahead with public spending so that infrastructure growth happens at a good pace.”

He also wanted GST to be implemented as early as possible as not doing so at the right time will be a big negative for the industry. He also wanted major reforms in indirect taxes and certain legislations simplified as well.

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