The government has decided to review the hike in vehicle registration fee it had proposed last month. This review comes amid slowdown in the auto industry. The auto sector lobbied against the increase in registration fee in the midst of the worst slowdown in nearly two decades.
According to a report in the Economic Times, the government has now stopped in its tracks and is not actively pushing to implement the new charges anymore. The Ministry of Road Transport and Highways had issued a draft notification on July 26 proposing up to 20 fold increase in registration charges. The draft proposed that new medium good/passenger vehicles would be registered for Rs 20,000 instead of the current Rs 1,000, while new truck or buses would be charged Rs 20,000 instead of Rs 1,500, new two-wheelers Rs 1,000 instead of Rs 50 and new cars Rs 5,000 instead of Rs 600.
Following the draft, automakers petitioned the government seeking reduction in GST and other charges that inflate the cost of a vehicle. According to reports, Nirmala Sitharaman had a meeting with automakers following which she met Prime Minister Narendra Modi to discuss the issue.
The draft notification wanted to incentivise electric vehicles by proposing to exempt them from registration charges. Increase in the registration fee of petrol and diesel cars was expected to push people towards electric vehicles.
Industry body Society of Indian Automobile Manufacturers (SIAM) warned the government after the draft notification saying that it will further aggravate an already worse situation in the auto industry. "Currently, the automobile industry is going through an unprecedented downturn as sales of new vehicles have plummeted significantly over the last several months. Such increase in the registration charges of new vehicles would further aggravate the market condition negatively," said Rajan Wadhera, President, SIAM.
Sales of passenger vehicles to car dealers fell 30.9% to 200,790 in July, data released by SIAM showed. Commercial vehicles sales fell 25.7% to 56,866 units, it added. Motorcycle and scooters sales fell 16.8% to about 1.51 million units, while passenger car sales fell 36% to 122,956 units, the data showed. July saw the highest monthly de-growth in 19 years of 18.71 per cent.