Facing unprecedented crisis, auto dealers seek govt support in letter to PM Modi

Facing unprecedented crisis due to the coronavirus outbreak, Federation of Automobile Dealers Association (FADA) has written to Prime Minister Narendra Modi seeking relief for auto dealers.

The auto industry, including manufacturing and distribution, is completely shut down due to the lockdown over COVID-19.

In the letter to Modi, FADA has sought temporary and urgent support measures to improve the cash flows and sustain the business until the auto retail industry’s demand is revived.

The auto dealers' body has requested government help for working capital support along with the extension of MSME benefits.

"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 the past 15 months," the FADA said in its letter to Modi.

“Together we employ over 40 lakh employees in the country at dealerships and service centres with 25 lakh direct employees and another 15 lakh are indirectly dependent on dealerships for their livelihood,” it noted.

It has sought 'working capital support' and wants the government to "reset the clock for the period of the lockdown for auto dealers on all working capital."

The letter also suggested an extension of 4% interest subvention or subsidy for working capital and loan requirements to companies for a period of nine months post the lockdown.

Besides, the auto dealers' body has also asked for a complete waiver of interest on all category of loans from banks and NBFCs for the period. It suggested 20% additional overdraft on sanctioned credit limits for a period of 6 months.

Noting that the automotive sector is impacted by very high GST rates, the FADA has also sought tax relaxation on the industry.

It has also requested the government to include wholesale and retail trade and repair of motor vehicles and motorcycles in Micro, Small and Medium Enterprises Development (MSMED) Act from April 1.

Earlier, the automobile dealers sought immediate financial support from car manufacturers and the government as they were faced with the challenge of retaining their workforce and sales infrastructure.

The government last month announced a 21-day lockdown till April 14 to stop the spread of novel coronavirus. While the nationwide lockdown will end this week, several states have already announced a two-week extension.

All businesses except those providing essential services are closed during the lockdown period.

So far, 9,152 cases of coronavirus have been reported in India with a death toll of 308.