Over 3 lakh jobs lost as auto sector crisis deepens

The country’s auto sector is going through a lot of crisis. Due to the huge drop in sales, the jobs of about 3.5 lakh people have been lost in the auto sector since April. In view of this, the giants of the auto sector have demanded a variety of incentive packages including reduction in GST. On Thursday, Mahindra & Mahindra chairman Anand Mahindra demanded a reduction in the GST rate.

Negative sales leading to large scale lay offs

Significantly, to overcome the auto sector crisis, on Wednesday, along with auto industry representatives Pawan Goenka, managing director of Mahindra & Mahindra, RC Bhargava, chairman of Maruti, Pawan Munjal of Hero Moto, including representatives of SIAM and FADA had met with Finance Minister Nirmala Sitharaman. Everyone demanded the finance minister to cut GST and provide incentive package to bring this sector back on track at the earliest.

The auto sector, which contributes about 7.1 per cent to the country’s GDP, has been witnessing a decline for the last one year. Due to this, showrooms of auto companies are being closed and large scale layoffs are taking place. Because of this, people of this industry are demanding a reduction in GST. At present, GST of 28 percent is levied on cars and motorcycles, which is being demanded to be reduced to 18 percent.

Addressing shareholders at the annual general meeting (AGM) of Mahindra & Mahindra, Anand Mahindra said, “The most natural and first welcome step could be to provide some relief on the GST front, change the rates or if it is not possible, then at least the cess should be abolished. Another option may be to review the registration fees. I hope that with such steps this industry will come on track and it will have a positive effect on the economy as well.”

Due to the slowdown in the automobile industry, a large number of people have started facing problems. According to a Reuters report, about 3.5 lakh people have been laid off since April. Auto dealers have fired around 2 lakh people. The auto sector is providing jobs directly and indirectly to about 35 million people.

Apart from this, the auto sector has been hit by a slowdown due to cash crisis, weak monsoon, slowdown in economy, reduced consumption, loss of jobs, organized sale of old vehicles etc. due to the NBFC sector getting into trouble.

Significantly, for the ninth consecutive month in July, sales of passenger vehicles have come down. Sales fell nearly 30 per cent last month. Maruti Suzuki sales have fallen by 36 per cent, while Honda cars have fallen by 49 per cent.