Bruised carmakers get a much-needed relief from the government

• BS-IV vehicles purchased until March 30, 2020 will be allowed to run on the roads for the duration of the registration.
• Any vehicle that is bought from now until March 2020 will be eligible for 30% depreciation.
• The government departments have been told to actively replace the old vehicles.

In a huge relief to Indian auto manufacturers, Finance Minister Nirmala Sitharaman much needed changes for the auto industry. “BS-IV vehicles purchased until March 30, 2020 will be allowed to run on the roads for the duration of the registration," the Finance Minister said.

Any vehicle that is bought from now until March 2020 will be eligible for 30% depreciation, double that of the current rate of 15%, she said.

Sitharaman also said that the government departments have been told to actively replace old vehicles. Until now, there was a ban on the government offices from retiring their old vehicles as part of a cost control initiative.

The Indian auto industry has been witnessing a massive slowdown that has continued since the last 10 months. All big auto manufacturing giants have been cutting down on production to align with the tapering demand.

Indian corporates had also expressed their dissent against the government for not helping out the auto sector while the economy was slowing down.

“There is no demand and no private investment, so where will growth come from? It doesn’t fall from the heavens. The auto industry is going through a very difficult period. Cars, commercial vehicles and two-wheelers are going through a rough patch,” Rahul Bajaj, Chairman of Indian conglomerate Bajaj Group had said.

Meanwhile, two-wheeler segment market leader Hero Motocorp too had expressed its concerns about sales being hit due to the economy.

"The overall economic and customer sentiments continued to be soft during the first quarter of this fiscal and their impact is clearly visible in the performance of the auto sector. The outlook for the rest of the year will be dependent on multiple factors, including the progress of monsoon and festive season offtake, as well as improvement in liquidity,” Niranjan Gupta, Chief Financial Officer, Hero MotoCorp had said.