The government has acknowledged that lending to the sector has stalled and assured of steps to encourage banks to push loans
Automobile companies, who were banking on a Goods & Service Tax (GST) cut to bail them out from the slowdown that has gripped the sector, are likely to be disappointed as the Centre may dash their hopes after evaluating their snail-paced compliance to Bharat Stage-VI roll out, reports The Times of India.
The GST Council is unlikely to ease rates as it faces revenue deficits and given that such a step would also require states’ approval, the report added.
Moneycontrol could not independently verify the report.
The government has, however, acknowledged that lending to the sector has stalled and assured of steps to encourage banks to push loans and make up for the vacuum created by the exit of many Non-Banking Finance Companies (NBFCs) from the space, the report stated.
Expectations had risen after the GST Council heeded demands for a GST cut from the real estate sector. But, the cut did not help much as the problem lies elsewhere, a source told the paper.
The Centre noted that automakers dragged BS-VI implementations till it became apparent there would be no extension and that the Supreme Court respite would not extend beyond April 2020. Sources told the paper that companies would need to consider resale value for buyers who were reluctant to invest in options that would soon be obsolete."Companies should already have put in place a product mix, which allowed consumers to choose between BS-IV and BS-VI emission standards. This is taking the 'just in time' model a bit too far. You can’t get all your BS-VI models close to the switch-over date," the source added.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.