Auto Sector in India Facing Grim Future, Need Urgent Steps: Dealer Association to PM Modi

The Federation of Automobile Dealers Associations (FADA) has written to Prime Minister Narendra Modi in search of instant monetary help from the federal government for the ailing sector amid the nationwide lockdown because of coronavirus pandemic.

In its letter to the prime minister, FADA sought an entire waiver of curiosity on all class of loans from banks and NBFCs for the lockdown interval.

The business physique, which represents round 15,000 auto sellers, additionally sought extension of four per cent curiosity subvention/subsidy for working capital/mortgage necessities to firms for a interval of 9 months submit the lockdown.

FADA sought that the wage of individuals employed on the dealerships throughout the lockdown interval must be paid by means of ESIC.

It has additionally requested for a grant of MSME extension to auto retail.

The subsidies and incentives obtained below the MSME division will present much-needed reduction to dealerships, which offer direct and oblique employment to lakhs of individuals, FADA mentioned within the letter which was additionally marked to Finance Minister Nirmala Sitharaman and Transport Minister Nitin Gadkari, amongst others.

The business physique has sought measures like GST lower on vehicles, incentive-based scrappage coverage and precedence sector tag for the sector to spice up demand post-lockdown interval.

FADA mentioned the auto business has already been reeling below a extreme slowdown for the final 15 months, with greater than 275 dealerships already shut, leading to large job losses.

“The current situation can lead to an existential situation for many of our members and their employees. Majority of them are small scale family-run businesses with no financial sustenance for such a crisis after already having gone through a tough period in past 15 months,” FADA President Ashish Harsharaj Kale mentioned within the letter.

Over the years, the auto dealership enterprise mannequin has come below extreme pressure with rising prices and low working margins, thereby decreasing the sector’s energy to face challenges like the present scenario and its after-effects, he added.

“While we are taking it up with SIAM at a complete change of the business model to build up sustenance for the after-effects of COVID-19 and for any future disruptions, the immediate situation is extremely bleak if not supported,” Kale mentioned.

Many auto sellers will exit of enterprise and livelihood of lots of of hundreds can be misplaced if the sector does not get authorities help, he added.