Q. The automobile sector is in the news as it is experiencing prolonged negative growth. Why is the industry in reverse gear? Why are jobs being lost? And how can the government help?
ఆటోమొబైల్ రంగం వార్తల్లో ఉంది, ఎందుకంటే ఇది దీర్ఘకాలిక ప్రతికూల వృద్ధిని ఎదుర్కొంటోంది. పరిశ్రమ రివర్స్ గేర్లో ఎందుకు ఉంది? ఉద్యోగాలు ఎందుకు కోల్పోతున్నాయి? మరి ప్రభుత్వం ఎలా సహాయపడుతుంది?
Eswar
Q. The automobile sector is in the news as it is experiencing prolonged negative growth. Why is the industry in reverse gear? Why are jobs being lost? And how can the government help?
# 1
Replay on 18-08-2019 14:54:03
Q. The automobile sector is in the news as it is experiencing
prolonged negative growth. Why is the industry in reverse gear? Why are jobs
being lost? And how can the government help?
Automobile industry has failed to
arrest the downturn that started almost a year ago, despite deep discounts and
new model launches, it has been forced to undertake production cuts and trimming
of over 2.15 lakh jobs in the sector. The reasons are -
1. Floods in Kerala and heavy rainfall in several other
States in 2017 and recent floods in some states.
2. Increase in fuel prices and higher interest rates.
3. A hike in vehicle insurance costs.
4. Crisis in NBFCs eg the IL&FS crisis late last year.
Nearly half the vehicles sold in rural markets, the segment that has been
witnessing a higher growth rate in comparison to urban markets, are financed by
non-banking financial companies (NBFC).
5. Probably the customers intend to buy the latest Bharat
Stage (BS)-VI emission standard compliant vehicles or are waiting for more
incentives from vehicle makers who will be looking to sell off their BS-IV
compliant stocks before the April 1, 2020 deadline.
6.As focus on
electric vehicles (EVs) by the government may also be encouraging buyers to
postpone the purchase of petrol and diesel vehicles.
7. Growing competition from the pre-owned cars market is
also pulling down sales of new vehicles.
8.During FY19-21,
vehicle prices are estimated to jump 13-30% due to safety, insurance and
emission-related compliance costs.
Why are
jobs being lost ?
According to the latest figures that
are available, original equipment manufacturers (OEMs) have removed about
15,000 temporary workers in the past two to three months. A lack of working
capital amid tepid demand has led to closure of nearly 300 dealerships across
the country.
How can the government help?
The industry’s turnover is close to half of the
manufacturing GDP, accounting for about 11% of the entire GST revenues of the
country, the auto sector is hoping that the government will come out with a
revival package ahead of the festive season to yield benefits by
1. A reduction in GST to 18% from the current rate of 28%,
which will help in an immediate price reduction.
2. Taking measures to handle the NBFC crisis to infuse
liquidity into the system.
3. Clarity on policy for electric vehicles and introduction
of vehicle scrappage policy, which will also boost demand for new vehicles.
