Continuance of slowdown could lead to more job losses, social consequences: Auto industry

Seeking urgent stimulus from the government in the form of GST reduction, the auto industry on Thursday cautioned that if the current slowdown in the sector continued, there would be further job losses that could have societal and social consequences.

With the industry slated to move to BS-VI emission norms from April next year, automobile makers fear that price increase amid a slowdown would further compound the problem.

The auto industry, through the Society of Indian Automobile Manufacturers (SIAM), has been asking the government to reduce GST on automobiles to 18 per cent from 28 per cent.

"I think there are societal and social consequences of that. I am sure government will look at that," SIAM President Rajan Wadhera told reporters here.

He was responding to a query on what could happen if the demand for reduction in GST was not met.

"Let's say if for some reason you go down to such an extent that lot of people lost jobs, that is going to create a lot of turmoil," Wadhera said.

Expressing similar sentiments, Mahindra & Mahindra Managing Director Pawan Goenka said, "My worry is that if the industry does not turn back on a positive sort of growth for the remaining part of the months of fiscal year, you may see more layoffs."
Goenka further said, "My belief is that the employment levels that we have today amongst OEMs (original equipment manufacturers) and suppliers is probably more than what the current level of production will justify."
Citing past instances, he said, "Every initiative counts and fiscal stimulus is a very big initiative. In the past, history tells us that in 2008 and 2014 recession when we were hit by downturn there were tax rebates given by government. That did boost up demand."
Supporting the call, Tata Motors Managing Director and CEO Guenter Butschek said, "In order to get out of the current crisis and not miss the festive season, we require clarity from the government, here and now, on GST and scrappage policy."