In a move to boost the auto sector, the Prime Minister Narendra Modi-led central government has lifted the ban on the purchase of new cars for its departments, reported ANI. The lifting of the ban comes days after Union Finance Minister Nirmala Sitharaman promised measures to provide relief to the slowing down sector in the economy. 

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Boost to Auto Industry

The official communication to lift the ban on the purchase of vehicles by government departments was issued by the centre. The order was sent to the Cabinet Secretary, Finance advisors to all ministries and departments, Principal Secretary to Prime Minister and to vice-chairman NITI Aayog for implementation.

According to officials, an earlier order about the purchase of cars by the government had put a ceiling on the cost of the vehicle that can be bought and also made it mandatory to buy these cars only through Directorate General of Supplies and Disposals. The new order has brought in flexibility of buying cars as and when the need arises.

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Purchase of New Vehicles

In the order issued by the centre, it is stated that the decision is "pertaining to economy measures and rationalization of expenditure."

"Purchase of new vehicles to meet the operational requirement of Defence Forces, Central Paramilitary Forces & security related organizations are permitted. Ban on purchase of other vehicles (including staff cars) will continue except against condemnation. Consequent to the aforesaid condition, all proposals relating to purchase of vehicles by Ministries/Departments other than those against condemnation were being made with the concurrence of the Department of Expenditure," the order stated.

It further added, "The matter regarding ban on purchase of vehicles (including staff cars) except against condemnation has been reassessed and examined by this Department. I am directed to state that the ban on purchase of other vehicles (including staff cars) except against condemnation stands withdrawn with immediate effect. The purchase of new staff cars on requirement basis including against condemnation will continue to be regulated within the ceiling fixed by the Department of Expenditure from time to time. Purchase of vehicles other than staff cars for operational need is also allowed."

The order also stated that that ministries and departments in consultation with their financial advisers shall ensure that all purchases of vehicles are made judiciously keeping in mind the principle of "need" and want. 

Automobile Industry sees the worst month in two decades

India’s Private Vehicles (PV) industry suffered its worst-ever performance in two decades as a demand slowdown showed no sign of abating. Domestic sales of passenger vehicles plunged by 31.6% in August, down to 1,96,524 units, from last year, according to data released by the Society of Indian Automobile Manufacturers (SIAM). It was the 10th straight decline in domestic passenger vehicle sales and the worst in the history of SIAM’s compilation of monthly sales data since 1997-98. 

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Nirmala Sitharaman on the Auto sector 

Finance Minister Nirmala Sitharaman announced several measures to help the industry. The highlights of those measures were Sitharaman's core focus on lifting the ban from government departments to buy new vehicles, doubling the tax benefit from auto-makers and postponing the revision of the one-time registration fee. Nirmala Sitharaman also reassured that BS-IV compliant vehicles would continue to run through the entirety of their registration period. Rajeev Kumar, the Finance Secretary further tweeted a table which resonates the ways the government plans to boost the economy.

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(With ANI inputs)