Auto dealers body seeks industry status for auto retail sector

Automobile dealers body FADA Thursday urged the government to consider industry status for the auto retail sector, a move which will help it avail easy finances and sustain business in the long term. Suggesting a slew of measures to Finance Minister Nirmala Sitharaman for the growth of the industry and auto retail sector ahead of the Union Budget, the Federation of Automobile Dealers Associations (FADA) also sought the lowering of GST to five per cent on margins of all pre-owned vehicles to create a win-win situation for all stakeholders.

The Federation claims representation of some 25,000 automotive dealers pan India. "Our main request, amongst others, is to consider auto retail under MSME on an immediate basis and an industry status in the near or mid-term," FADA President Ashish Harsharaj said.

Granting of industry status will bring better financing options, since the sector is capital intensive in nature, it said adding there are various other benefits such as priority lending from banks, external commercial borrowings, easy financing from top lenders, entry of PE investments, easier access to domestic and global funds and better tax benefits, among others. The Federation has also sought a reduction in corporate tax for proprietary and partnership firms besides seeking elimination of debit and credit card charges passed on by the banks for transactions higher than Rs 5,000, especially for auto dealers who work on paper-thin margins.

According to the Federation, India needs to add at least 25,000-50,000 or more auto dealer outlets in the next 10-15 years, which will result in the requirement of not just additional working capital but capital for infrastructure to the tune of thousands of crores, it said. It will also require the additional workforce to the tune of one crore people for the new outlets, according to FADA.

Requesting the government to regulate downwards the overall GST and the cess charged to automobiles, FADA said, "We believe it will create a positive consumer sentiment and better affordability in automobiles, which have seen unprecedented price hikes currently." The Federation has also demanded announcement of attractive incentive policy to encourage scrappage of older vehicles and also revive growth in the auto sector.