Ashok Leyland: Scrappage policy, GST rate reduction can bring back CV industry

The commercial vehicle industry is slated to make a strong comeback and would be on its way to revival by introducing the scrappage policy, and reducing the GST rate, according to a top official at Ashok Leyland.

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As per the company, the coronavirus outbreak and the nationwide lockdown severely impacted the CV industry, but is on its way to improvement in the current fiscal year, with trade and business coming back to life.

On being asked whether slashing GST rates on commercial vehicles can be a helping hand in bringing back the CV industry, Vipin Sondhi, MD & CEO, Ashok Leyland, was in agreement. He said, “The answer is yes, it certainly will.”. He further added, “When you look at the commercial vehicle industry, it’s core to the country, it is pretty much the core industry…to have it at 28 per cent (GST rate) is something which the industry has put forth to the government in the past and now as well. Will it help? It will help, it could be one of the possible demand triggers.”

Sondhi went on to say that demand can be escalated further by means of the scrappage policy and enhancing investment in rural India. Talking about CV sales in the current scenario, he said, “Fundamentally what we are seeing is that each segment of commercial vehicle industry will have its own trajectory.”

The situation would depend on various factors like the impact of reforms initiated by the government and other factors like availability of liquidity at the right time, Sondhi noted. As per him, “I think every quarter will be better than the previous one and we will have to be ready.”

The company’s views come in line with the auto industry body SIAM’s insistence to the government to cut down GST rates on vehicles from 28% to 18%, along with introducing a scrappage policy based on incentives. While the scrappage policy is in the works as per government officials, there is no clear indication of whether GST rates would be cut down or not.

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