The Indian government is considering a stimulus package for the domestic automobile manufacturing industry which is forecast to record negative growth in the current fiscal year, government sources said on Monday, August 31.
The sources said that, while details of the package are still being finalized, one of the components will be the lowering of existing rates of the Goods and Service Tax (GST) on various product segments including passenger cars, utility vehicles and two wheelers.
Indications available are that the government has finalized the reduction of the GST on two wheelers from the current rate of 28 percent to a possible rate of 18 percent, the sources said.
The government is also studying the tax collection impact of having a uniform rate of GST on all vehicles at 18 percent from the current levels which range between 25 percent and 28 percent, the sources said.
A production-linked incentive (PLI) scheme is also under consideration wherein manufacturers could be offered fiscal incentives linked to exports and indigenization levels of vehicles made in India and the proportionate lowering of imports of components matched by higher domestic sourcing, the sources added.