Union Minister Nitin Gadkari on Wednesday has said that it is up to the Finance Ministry along with State Governments and GST Council to decide on reduction in GST rate for automobiles and that he has already spoken to the Finance Minister in this regard.

The Road Transport and Highways Minister also said a scrappage policy, which also includes two-wheelers, is in the works and will be launched soon. Last week at the SIAM annual convention, Gadkari assured the auto industry that he would take up the issue of GST reduction for automobiles to 18 per cent from 28 per cent.

FM can decide on GST reduction - Gadkari

"I have already discussed with the Finance Minister. But ultimately if the FM has to take any decision it must be with the consultation with State Finance Ministers and GST Council," Gadkari said at the launch of a BS-VI scooter by Honda Motorcycle and Scooter India. He further said, "currently the ball is in the court of the Finance Ministry and he is confident that the Ministry in consultation with State Governments will take a positive decision."

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Commenting on vehicle scrappage policy, Gadkari said a draft has already been prepared. "But there are still problems related with various stakeholders. We need cooperation from the manufacturers as well as the Finance Ministry," he added.

"Some of the issues are related with tax while some are related with state governments," he added.

When asked how soon such a policy could become a reality, he said, "we are ready with the process. My ministry is trying to get it cleared as early as possible and I am confident that in the limited short time we would come to a conclusion and we will launch the policy." He also said such a policy would also include old two-wheelers and "if the two-wheeler industry wants to suggest anything we are going to listen to it with an open mind."

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He also addressed the distressed situation in auto industry

Acknowledging the current distress in the auto industry, the Minister said the reasons could be myriad due to demand and supply issues, global economic slowdown, or due to business cycle. He, however, exuded confidence that within five to six years, India will become a global manufacturing hub for automobiles.

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The growth of the automobile industry is very important for India's overall economic growth and employment generation, he added. When asked for comments on various states, including BJP-ruled Gujarat, refusing to implement the new motor vehicles law due to hefty penalties, Gadkari said since it was in the concurrent list, states were free to take their own decision.

He, however, said that the intent of heavy fines was not to create additional revenue but to prevent accidents and save lives. Moreover, he said the fines that were fixed 30 years ago would also need to be updated according to the current situation.

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