New Delhi, April 17: Auto industry body SIAM on Friday said it has sought temporary GST rate cut on vehicles and introduction of incentive based scrappage policy from the government at the earliest in order to revive the sector amid the coronavirus pandemic. While appreciating RBI's announcement to support NBFCs and MSME sector by infusing liquidity in the system, the Society of Indian Automobile Manufacturers (SIAM) sought several 'key interventions' for the the auto sector.

"COVID-19 has left the Indian economy and automobile industry in deep distress and financial support and demand revival is a necessity," SIAM President Rajan Wadhera told PTI. COVID-19 is an unprecedented situation and hence requires unique measures, he added. Auto Sector Crisis: Vehicle Sales Down by 13.08% in December 2019, Production Declines by 5.22%, Says SIAM Report.

"SIAM is hopeful that the lending rates would be slashed substantially for consumers to benefit in these challenging times," he added. In order to revive the auto industry, SIAM has sought temporary reduction in standard GST rate by 10 per cent across all vehicle categories, auto components while maintaining the current product segment GST rate differential, Wadhera said.

The auto industry body has also sought introduction of incentive based vehicle scrappage scheme to generate demand. "The incentives can be in the form of 50 per cent rebate in GST, road tax and registration charges," he added.

SIAM has also asked for fund allocation for diesel/CNG bus procurement by state transport undertakings, over and above the allocation for electric buses under FAME 2 scheme, Wadhera noted. Besides, it has also asked to expedite release of all pending payments to vehicle manufacturers and contractors of highway and infrastructure projects against past procurement by central government and other agencies to increase liquidity in the system, he added.

Wadher said SIAM has also asked for fast track disbursement of all government incentives and benefits to all industries. "The automotive industry is the backbone of manufacturing sector in India in terms of employment and contribution to GDP, and its revival will be critical for the manufacturing sector and economy of India," he added.