{"id":25949,"date":"2021-02-13T12:45:17","date_gmt":"2021-02-13T07:15:17","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=25949"},"modified":"2021-02-13T12:45:18","modified_gmt":"2021-02-13T07:15:18","slug":"struggle-of-automobile-sector-in-2021","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/struggle-of-automobile-sector-in-2021\/","title":{"rendered":"Automobile Sector in 2021: Will it Continue to Struggle or get some Relief from the Government?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Recession and severe dip in growth is not new to the automobile sector. Even before the pandemic outbreak, this sector was struggling to get back on track. As the year 2021 unfolds, the automobile industry is optimistic to recoup from the losses caused by the COVID-19 pandemic.<\/p>\n\n\n\n<p>The schemes like\nManufacture and Other Operations in Warehouse Regulations\u2019 (MOOWR), Manufacture\nand Other Operations in Warehouse Regulations\u2019 (MOOWR), and \u2018Remission of\nDuties and Taxes on Exported Products\u2019 (RoDTEP) has already been launched and\nshows a positive sign of improvement.<\/p>\n\n\n\n<p>Under the PLI\nscheme, the government of India has proposed a budget of INR 57,042 crores\ntargeted to the auto sector &amp; a supplementary package of Rs 18,100 crores\nfor Advanced Chemistry Cells used in an electric vehicle. The scheme aims to\nreduce the import demand and incentivize production for suitable entities.<\/p>\n\n\n\n<p>The PLI scheme contributes nearly 40% of India\u2019s manufacturing GDP, it is expected that it will channelize the focus towards manufacturing to propel growth and create ample job opportunities.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/gst-collection-for-december-2020-hits-all-time-high-record\/\">GST Collection for December 2020 Hits all-time High Record<\/a><\/mark><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/struggle-of-automobile-sector-in-2021\/#What_is_the_Expectation_of_the_Auto_industry_from_the_Latest_Budget\" >What is the Expectation of the Auto industry from the Latest\nBudget?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/struggle-of-automobile-sector-in-2021\/#Key_Factors_that_Incurs_Growth_for_Automobile_Sector_in_Future\" >Key Factors that Incurs Growth for Automobile Sector in Future<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/struggle-of-automobile-sector-in-2021\/#How_Reduced_GST_Rates_can_help_the_Automobile_Sector_to_Thrive\" >How Reduced GST Rates can help the Automobile Sector to Thrive?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/struggle-of-automobile-sector-in-2021\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Expectation_of_the_Auto_industry_from_the_Latest_Budget\"><\/span>What is the Expectation of the Auto industry from the Latest\nBudget?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With Union Budget\nis around the corner, the entire country will be on its toes has been expecting\nsomething extravagance from the Finance ministry. The Honorable minister\nNirmala Sitharaman has promised that the Union Budget of this year would be\ngroundbreaking as the government tries to stabilize the distressed economy and\ndrive growth.&nbsp;<\/p>\n\n\n\n<p>In such a situation, the automobile sector expecting to confront major reliefs from the Latest budget in several areas that also includes direct and indirect taxation, in addition to the multiple policy-level initiatives. From the policy-level standpoint, the automobile sector will experience the PLI scheme to be more focused on import substitution &amp; factor the development period related to establishing an effective value chain in the country.&nbsp; <\/p>\n\n\n\n<p>A major car manufacturer in the nation seeks reductions in road taxes &amp; the cost of registration. Furthermore, the conducive financial schemes &amp; plans will further escalate sales. The government got to launch growth-centric schemes to support electronics &amp; semi-conductor manufacturing &amp; assembly to lure overseas investment in the nation. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Factors_that_Incurs_Growth_for_Automobile_Sector_in_Future\"><\/span>Key Factors that Incurs Growth for Automobile Sector in Future<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Key-Factors-that-Incurs-Growth-for-Automobile-Sector-in-Future.png\" alt=\"Key Factors that Incurs Growth for Automobile Sector in Future\" class=\"wp-image-25953\" width=\"533\" height=\"391\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Key-Factors-that-Incurs-Growth-for-Automobile-Sector-in-Future.png 985w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Key-Factors-that-Incurs-Growth-for-Automobile-Sector-in-Future-300x220.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/02\/Key-Factors-that-Incurs-Growth-for-Automobile-Sector-in-Future-768x563.png 768w\" sizes=\"(max-width: 533px) 100vw, 533px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">High\nExpectation from Scrappage Scheme <\/h3>\n\n\n\n<p>To scale up the\nmarket demand, the government might introduce the much-awaited scrappage scheme\ntargeted to the automobile sector. Scrappage scheme serves dual purposes; first,\nit removes the old and efficient vehicle from roads and second, it stimulates\ngrowth for the automobile sector by increasing the demand.&nbsp;<\/p>\n\n\n\n<p>According to\nexperts, a suitable Scrappage scheme is promising enough to create an\nautonomous industry with a business opportunity worth 6 billion dollars\/year.\nApart from this, the scheme can also render an opportunity to create a new form\nof business that deals with the recycling of plastic and rubber of scrapped\nvehicles.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Impact of COVID 19 on\nthe Automobile sector<\/h3>\n\n\n\n<p>The pandemic has\ndisrupted the auto sector like never before. Crippled commercial and economic\nactivities have deepened the woes of automobile dealers. In the peak phase, the\nsector has encountered a loss of Rs 2300 crore\/day. In addition to that, the\nemployment scenario in this sector has been affected as the estimated job loss\nstood at 3.45 lakh.&nbsp;<\/p>\n\n\n\n<p>As per SIAM (Society\nof Indian Automobile Manufacturers), in April 2020, the automobile sector\nregistered a revenue loss of about Rs 69,000 crores. In the same year, the\noverall sales of auto units encountered a decline of 30% as compared with 2019.\nWhile the passenger cars might encounter some recovery in 2021, the luxury\n&amp; super segment will continue to struggle.&nbsp;<\/p>\n\n\n\n<p>It is also\nspeculated that the government may come up with a COVID cess\/ surcharge on\nhigh-income earners, which might hamper the personal disposable income of the\nend-users. This would cause a severe dip in the vehicle demand, thereby\nenforcing the auto sector to face the financial crunch.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Reduced_GST_Rates_can_help_the_Automobile_Sector_to_Thrive\"><\/span>How Reduced GST Rates can help the Automobile Sector to Thrive?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The reduced GST rate is vital to stimulate the growth of the auto sector. In the personal vehicle segment, the sector has manifested an escalating preference for personal mobility due to the social distancing norms. To expand the same, the <em><strong>government of India<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Government_of_India\"><em><strong>[1]<\/strong><\/em><\/a><\/sup> and the GST council might cap the GST at 18% from 28% to make the two-wheelers and entry-level cars cheaper for the end-users. In view of this, the government may also reduce the compensation cess rates to support everyone&#8217;s interest.<\/p>\n\n\n\n<p>Moreover, limiting the restrictions to avail ITC of GST paid on a vehicle for businesses would make the automobile cheaper when utilized for business purposes, besides addressing the requisite of GST to mitigate cascading of taxes. In addition to that, the increased rate of depreciation of automobiles under <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>Income Tax<\/strong><\/a> would boost the demand.<\/p>\n\n\n\n<p>Other incentives\nsuch as deduction in registration charges\/road taxes will minimize the cost\nburden on consumer automobiles. With car loans being disbursed at a low rate of\ninterest by banks and other private lenders, the finance ministry may consider\naugmenting the availability of tax deduction of interest applicable on the loan\nfor electronic vehicles to other vehicles as well.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In view of unprecedented times, the need to incorporate these requisites is much more than ever in this union budget and there is nothing wrong in claiming that this is a suitable phase for implementing measures to trigger economic growth &amp; drive the agenda of the government to bring the economy back on track.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/lets-understand-the-important-dates-for-gst-return-filing-in-detail\/\">Let\u2019s Understand the Important Dates for GST Return Filing in Detail!<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recession and severe dip in growth is not new to the automobile sector. Even before the pandemic outbreak, this sector was struggling to get back on track. As the year 2021 unfolds, the automobile industry is optimistic to recoup from the losses caused by the COVID-19 pandemic. The schemes like Manufacture and Other Operations in [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":25950,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1529],"acf":{"service_id":"96"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3414,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25949"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=25949"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25949\/revisions"}],"predecessor-version":[{"id":25975,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25949\/revisions\/25975"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/25950"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=25949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=25949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=25949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}