Nitin Gadkari Softens His Stance For Auto Industry, Reverses His Decision To Ban ICE Vehicles

Avishek Banerjee Sep 06, 2019

Nearly two years back, Nitin Jairam Gadkari (during Modi’s first term) made a bold statement that by 2030, sales of Internal Combustion Engine (ICE) vehicles will be banned and will make way for electric vehicles. Exactly two years later, in a much softer tone, he clarified that petrol and diesel-powered vehicles will not be banned in the country. His statement comes at a time when the entire industry is at a crossroads with the Internal Combustion Engine (ICE) and a rapid transition to electric vehicles. 

"The government has no intentions of banning the production or stopping the existing petrol and diesel-fuelled vehicles. People had apprehensions about buying ICE vehicles and we are not going to take any such step," commented Nitin Gadkari, Minister for Road Transport & Highways and Micro, Small & Medium Enterprises (MSME), Government of India, while addressing the 59th annual convention organized by Society of Indian Automobile Manufacturers (SIAM) titled ‘“Building the Nation, Responsibly: Moving into a New Era of Auto Industry”. At the convention, Gadkari provided assurance to the automobile industry of support from the government and said that he will take up the industry’s demand for GST reduction with the finance minister. 

Talking about the issues related to auto financing, Gadkari asked the auto industry to establish their own, proprietary financing arm to boost sales. He stated, “The industry has asked that there should be a reduction in GST of petrol and diesel vehicles considering the forthcoming increase in prices of vehicles and the BS-VI norms deadline. Even if GST is reduced for some time, it will help the sector to increase vehicle sales.” He also said, “GST on electric vehicles has been reduced from 12 per cent to 5 per cent. I will propose to the finance ministry to make the same benefit available for hybrid vehicles.” Gadkari assured that the government is trying to bring out the vehicle scrappage policy quickly, which will lower production costs to a huge extent.

Kenichi Ayukawa, Vice-President, SIAM and MD & CEO, Maruti Suzuki India, appreciated Gadkari’s assurances to assist the auto industry and highlighted the need to collaborate with various stakeholders to wriggle out of the prolonged crisis.
 
At the same session, Uday Kotak, President-Designate, CII and Managing Director & CEO, Kotak Mahindra Bank said, “Auto industry needs to emphasize on exports to boost supply. This will help to overcome the stress present in the domestic market. The rupee which is weak at present will also favour this measure.

Rajan Wadhera, President, SIAM & President (Automotive Sector), Mahindra & Mahindra reiterated the need to reduce GST on automobiles to Gadkari. He also highlighted the need for the government to consider a single nodal regulatory ministry for the auto industry. “The automotive industry is integral to the economic and social development of the nation. With BSVI norms coming into effect from April next year, restrictions on different vehicles based fuels need to be removed for the auto industry in order to be at par with the best in the world when it comes to pollution.”  