Government Unlikely to Hike Vehicle Registration Fee Due to Auto Sector Slowdown

(Image for representational purpose/Reuters)

(Image for representational purpose/Reuters)

The Indian automotive industry is undergoing one of the worst slowdowns in history and as a result, the government may postpone the hike in the vehicle registration fee.

The Indian automotive industry is going through one of the worst slowdowns it has witnessed with vehicles across categories and price points continue to post plummeting sales numbers month after month. This has been evident in the commercial vehicles space as well as the passenger vehicles sales, with cars, scooters and motorcycles, all posting a decline in sales. As a result, the government may decide to postpone the roll-out of the upcoming hike in vehicle registration fee by a few months, reports CNBC-TV18.

"While nothing has been decided but there is some preliminary thinking that we may look at bringing this into action from January," says the report citing an anonymous person aware of the development.

While many in the industry believe that a hike during a situation like this would further slow down the industry, the ministry of road transport and highways have categorically informed that the hike will have a positive impact instead.

"Automobile sales have been in the slow lane for some months and the larger reasons behind it concern liquidity tightening after the NBFC [non-banking finance company] crisis. The hike in registration fees is something which has been in the pipeline for a long time now and if anything, it should boost sales now. It cannot be seen as the reason behind the slowdown that the industry has been facing for some time now," says the report citing another person aware of the matter.

The draft notification which was released on the 24th of July, proposed an increase in the registration charges of new vehicles by about 10 to 20 times depending on the category of the vehicle, as compared to the current level.

To put it in perspective, when it comes to new vehicle sales, the government has proposed a hike in registration fees for tw0-wheelers from Rs 50 to Rs 1,000, Rs 300 to Rs 5,000 for three-wheelers, for light motor vehicle from Rs 1,000 to Rs 10,000 and when it comes heavy goods vehicles, the price hike has been proposed from Rs 1,500 to Rs 20,000.

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