Union minister of road transport and highways Nitin Gadkari said on Thursday that the government has no plans to ban petrol and diesel vehicles, giving much relief to the auto sector, which is going through one of the worst slowdowns in a decade.

The minister, who was chief guest at the Society of Indian Automobile Manufacturer (SIAM’s) annual convention on ‘Moving into New Era of Auto Industry’, said the auto industry, which has seen dwindling sales for over a year now, is in immediate need of assistance.

“Slowdown is a part and parcel of life, and problems can be converted into opportunities. The slowdown is also impacting employment potential as well as the growth of the country and hence needs immediate intervention,” Gadkari said in his address. He said the slowdown has been caused by issues related to global economy, and demand and supply, adding that “the government is with the automobile sector”.

Gadkari also promised to take up the sector’s request for a cut in the goods and services tax (GST) on hybrid vehicles with finance minister Nirmala Sitharaman. “The industry has asked that there should be reduction in GST of petrol and diesel vehicles considering the forthcoming increase in prices of vehicles and the BS VI norms deadline. GST on electric vehicles has been reduced from 12% to 5%. I will propose to the finance ministry to make the same benefit available for hybrid vehicles,” he said.

“Our intention should be to increase sales as the sector needs help at the moment.”

He also proposed incentives to boost exports and said that a new scrappage policy is under consideration and that the government is trying to process it soon, as this will boost new vehicle sales and lower the production costs.

The government has been actively promoting the use of green energy and electrifying the transport system to cut down its crude oil import bill and honour its Paris Agreement commitments. Also, air pollution has become a major issue in many Indian cities. Given the circumstances, Gadkari urged the auto industry to move towards adopting cleaner sources of fuel, reassuring it at the same time that the onus of reducing pollution won’t solely rest on it.

Gadkari also drew the industry’s attention to the fact that consumer preferences in India are changing and advised it to switch to high quality manufacturing models. “Young and aspirational Indians do not want to buy cheap and outdated vehicles,” he said. “India can become the No. 1 manufacturing hub. The industry should suggest other ways to the government to revive growth.”

The minister said that the ₹4.50 lakh crore automobile sector should also explore financing options for customers. “To auto boost sales, automakers should consider starting a non-banking finance company for lending to buyers,” he said.

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