india

Updated: Jun 26, 2020 20:30 IST

Road transport minister Nitin Gadkari on Thursday assured that there were no plans to ban conventional petrol and diesel vehicles amid an unprecedented slowdown in the auto industry.

“There were discussions and the ministry had received suggestions that petrol, diesel vehicles be banned. I would like to clarify that government does not intend to ban petrol and diesel vehicles. We aren’t going to do anything like that,” said Nitin Gadkari.

The minister, who was addressing the annual meet of the Society of Indian Automobile Manufacturers (SIAM), said the government is considering a cut in the goods and services tax (GST) rate for hybrid vehicles.

On the auto industry crisis, Gadkari said the sector is facing problem because of global economy, demand and supply. “Government is already with the automobile industry and under the finance ministry we’ll find out a solution,” he said.

Watch: Decoding the auto sector meltdown

Passenger vehicle sales in India declined by 30.98% in July compared to the same month last year. This is the steepest fall the industry has witnessed in the 19 last years.

Gadkari said he has asked automakers to consider starting non-banking finance company for lending to buyers to boost sales.

Vehicle sales fell by around 31% in July, a nine-month long streak. Reuters reported that automakers, component manufacturers and dealers have laid off about 350,000 workers since the start of the year.

Also read: India’s economy suffers automotive crash, pain spreads to villages

The country’s largest carmaker Maruti Suzuki India on Wednesday announced that it will suspend production at its Gurugram and Manesar plants in Haryana for two days. This is the first time the company will close both plants simultaneously for two days and comes at a time when the auto major is battling a slowdown.

The automobile sector, Gadkari said, needs to focus more on quality. “India can become number one manufacturing hub. The automobile firms should be quality-centric not cost centric.”

Finance minister Nirmala Sitharaman last month announced some measures to address the slowdown in auto sales. She lifted the ban on purchase of new vehicles by government departments and allowed an additional 15% depreciation on vehicles acquired from August to March 2020.

The FM had also said that BS IV vehicles purchased till 2020 will remain in operation for the entire period of registration. This announcement was aimed at allaying fears that such vehicles will be forced out of the roads.

Automakers are pinning their hopes in the festive season for a turnaround of fortunes. Traditionally, October-November witnesses a boost in auto sales. Sales during the festive season constitute almost a third of the vehicles sold in a year.