The suggested support measures include complete waiver of interest on all categories of loans taken by dealers, 4% interest subsidy for nine months post the lockdown, and payment of employees’ salaries during the lockdown through the Employees’ State Insurance Corporation.
Further the letter suggested inclusion of automobile dealers into MSMED (Micro, Small and Medium Enterprises Development) Act from 1 April. The act outlines that any buyer who fails to make payment to MSMEs, as per agreed terms or a maximum of 45 days, would be liable to pay monthly compounded interest at three times the bank rate notified by RBI.
The letter was written by the Federation of Automobile Dealer’s Associations (FADA).
“These temporary support (measures) are extremely urgent and important to help us cushion the shock to our cash flows and the only way for us to continue in business till demand comes back to normalcy,” FADA president Ashish Kale said in the letter.
The lobby group also made several suggestions to revive demand for automobiles once the movement restrictions are lifted. These included reducing the GST rate on automobiles or direct benefit transfer to vehicle buyers, extension of the vehicle depreciation benefit to FY21, an incentive-based scrappage policy for old vehicles, and the priority sector tag for the automobile industry.
“The current situation can lead to an existential situation for many of our members and their employees. majority of them are small scale family run businesses with no financial sustenance for such a crisis after already having gone through a tough period in past 15 months,” kale said.