Gadkari said he would recommend the finance ministry to reduce GST on internal combustion engine (ICE) vehicles
The Indian auto sector revved higher on September 5 after Union Road Transport and Highway Minister Nitin Gadkari said the government was looking at steps to revive the ailing sector.
Speaking at the 59th annual Society of Indian Automobile Manufacturers (SIAM) convention, Gadkari said he would recommend the finance ministry to reduce GST on internal combustion engine (ICE) vehicles, adding that the government did "not intend to ban petrol and diesel vehicles."
"Considering the slump in the sector and expected increase in cost due to the implementation of BS-VI emission norms, I will give my recommendation to the Finance Minister," said the minister.
Reacting to the news, the auto sector surged on September 5, with Nifty Auto closing 2.06 percent higher at 6,921.75. All but three constituent stocks were trading in the green, with Tata Motors, Bharat Forge, Motherson Sumi Systems emerging as the top gainers. Meanhile, Apollo Tyres was the biggest loser in the index, down 1.62 percent.
The sector has been in doldrums for some time now. Tepid demand and bloated inventory, along with government's active run down of petrol and diesel vehicles, have put the sector in a perpetual state of slowdown.
The outlook for the sector further worsened after industry leaders such as Maruti Suzuki, Tata Motors and Hero MotoCorp had reported de-growth of 34.53 percent, 45 percent and 20 percent respectively during the month of August, giving a clear indication of a prolonged slowdown in the industry.Nonetheless, Gadkari's comments bring some respite to the sector which has been calling for a GST cut.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.