Smart pricing, lower royalties can boost auto sales: Goyal

New Delhi, Sep 4 (IANS) Union Commerce and Industry Minister Piyush Goyal on Friday asked the auto sector to go in for “smart pricing” and offer “innovative financing” terms for buyers to shore up their sales.

He was speaking at the 60th SIAM Annual Convention which was held virtually.

In connection with the industry’s demand for a reduction in GST, Goyal asked the JV auto companies based in India to also ask for a royalty reduction from their parent companies to tide over these testing times.

Noting auto-makers that hold a sizeable chunk of the country’s auto market pay millions of dollars as royalty to their parent companies, he said that reduction in these can help them reduce the cash outflow, bring down the vehicle prices and help in boosting their domestic sales.

He also asked the JV companies to seek permission from their parent companies to allow them to export more from India to other countries.

The Union Minister also acknowledged that some sub-segments of the industry have almost reached pre-Covid-levels in August and the overall trend has improved.

According to the minister, the shift towards personal mobility due to the Covid- 19 outbreak will give a push to the industry’s off-take.

“In the Covid-19 era, we have seen the demand for shared mobility fizzing away, which was once the talk of the town. Current trends indicate that people will continue to buy cars, try out self-drive, autonomous and EVs, and therefore, as a corollary, the automobile sector’s health would eventually improve,” he said.

Goyal also reassured the industry about the Centre’s resolve to support the sector during these times.

“We are a listening government and we will continue to do all that we can to help the auto industry,” he said.

Furthermore, the minister urged the industry to look at a higher percentage of import substitution, to increase exports and strive for quality manufacturing.

“We need to build global scale plants in the auto sector that are at par with international standards,” he said.

“We should aim at improving the scale and quality of what we are producing and export it to the rest of the world. The key is to create a sustainable value chain.”

He pointed out that the committee for the ‘Remission of Duties and Taxes on Exported Products’ (RoDTEP) scheme might be approached to allow the auto sector get reimbursement of certain taxes to make it more price competitive.

The scheme which is being rolled out in a phased manner allows reimbursement of duties and certain taxes to sectors which have a high export potential.

“We will also look at devising innovative models to boost exports. Some of these that are currently prevalent include the credit guarantee model, creating automotive hubs and clusters, partnering with states to make land availability easier, and adopt a more competitive approach to domestic manufacturing.”

On increased localisation in the automotive segment, Goyal opined: “Best-in-class make and design, use of innovative technologies, smart packaging and intelligent product pricing can go a long way in fetching desired results. Skilling is another aspect that needs to be looked into, if we are to ace in domestic manufacturing.”

“Upskilling and reskilling should be treated as a priority and and industry-academia partnership is one of the best available models to achieve this goal.”

In addition, he said that Quality Control Orders should not be seen as barriers.

He said that it is high time India starts looking at quality control and provides the world with high-quality products.

“Once we get the quality consciousness in the country as a whole, we will transform India’s future, and that is the effort we are taking. Quality is never expensive. It brings down the cost,” he said.

“We need to bring in a culture of quality in the country, which has to be emulated by the customer. Only then will we become a global player.”

–IANS

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