Kickstarting The Engine

Of the various measures announced by Finance Minister Nirmala Sitharaman on August 23 to boost the flagging economy, the ones aimed at India’s Rs 8.3 lakh crore automotive sector were among the most notable, addressing issues the sector has been grappling with for some time.

- M.G. Arun

One had to do with Bharat Stage IV (BS-IV), the current environmental norm for Indian vehicles. Since India is bringing in BS-VI norms from 2020, skipping the stage in between to catch up with international standards, there has been confusion. Manufacturers weren’t sure of the fate of their BS-IV inventories and buyers thought it best to wait for clarity. Demand was sluggish anyway—with disposable incomes down and the jobs scenario looking bleak—and the regulatory tinkering put a further damper on car sales.

The auto industry’s July 2019 sales numbers were its worst in 19 years, falling 31 per cent from a year ago to just over 200,000 units, according to the Society of Indian Automobile Manufacturers (SIAM). At the beginning of June 2019, there were around a million passenger vehicles worth Rs 35,000 crore lying unsold in company dealerships. Taking note of this, the government has now announced that BS-IV vehicles bought on or before March 31, 2020, “will remain operational for the entire period of registration”. In other words, they will co-exist alongside BS-VI vehicles, due to be launched next year.