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Finance Minister hints at GST cut on two-wheeler.

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  • Two-wheeler currently attract 28 per cent GST.
  • Last year, the country’s largest two-wheeler maker Hero Moto Corp had urged the government to consider a phase-wise reduction in GST on the segment.

Finance Minister Nirmala Sitharaman on Tuesday said the Goods and Services Tax (GST) Council would look into the auto industry’s demand for lowering the tax rate on two-wheeler, which are now taxed at the highest slab rate of 28 per cent. The assurance came during an interaction she had with members of the Confederation of Indian Industry (CII).

“Since two-wheeler are neither a luxury nor a sin product, they merit a rate revision. Consequently, this will be taken up with the GST Council,” the CII quoted Sitharaman as saying.

The passenger vehicles industry has been requesting the government to consider a phase-wise reduction in GST on automobiles, cutting rates on two-wheeler in the first stage, and deferring the tax cut on four-wheeler to a later stage. This, the industry said, would help the government contain potential revenue loss, and at the same time provide relief to around 20 million potential two-wheeler buyers across the country.

Sitharaman said the government was open to further tweaking the Rs 3-trillion credit guarantee scheme for providing collateral-free loans to small businesses.

The scheme is open for professionals now, she added. Earlier this month, the government had widened the scope of the scheme by doubling the upper ceiling of loans outstanding to Rs 50 crore and including certain individual loans given to professionals like doctors, lawyers, and chartered accountants for business purposes under its ambit, apart from MSMEs.

Till August 20, banks disbursed more than Rs 1-trillion loans under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS), which was announced as part of the Aatmanirbhar Bharat package.

Sitharaman said the government would consider easing the standard operating procedures for ailing sectors such as tourism, hotels and hospitality, real estate and construction, and airlines. “Some sectors such as tourism, real estate, hospitality, airlines have been affected disproportionately.

Domestic revenue generation is a concern,” Sitharaman said, adding the government was working with the Reserve Bank of India to ensure adequate support to banks.

In the meeting, Sitharaman said structural reform was a key priority for the government and it would move fast on the Cabinet-cleared disinvestment proposals, including that of banks. The minister further said every announcement had a structural reform component with it, and the government was reaching out to industry to understand their concerns. “Structural reforms (are) key priority for the government, reflected in government announcements to address Covid-19 challenges,” Sitharaman said.

On the private investment cycle, she said that in September 2019, the government had reduced the corporate tax rate but investments could not happen due to Covid-19.

Automobile

Harley-Davidson in talks with Hero for sales tie-up in India.

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Harley-Davidson fans may still be able to buy the iconic bikes in India—their American maker is in advanced talks with Hero MotoCorp Ltd for sales, distribution and services in India, three people aware of the matter said.

According to these people, who asked not to be named, the deal may also include local assembly and production of select Harley models such as the Street 750 at one of Hero’s manufacturing units. Harley-Davidson, which has been in talks with India’s largest two-wheeler manufacturer for more than a year now, is aware that its plan to completely withdraw from the subcontinent would damage the brand, leading to unacceptability in the market in the future, industry executives said.

Announcing additional restructuring plans to its employees in the US on Thursday, Harley-Davidson Motor Co. said it has approved actions that involve optimizing its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India.

“The Harley-Davidson dealer network will continue to serve customers through the contract term,” it said. “It does not make much sense for Hero MotoCorp to settle down with a plain distribution and sales arrangement with them as it has its own well-established network across India. The arrangement, if it gets finalized, will include areas where Hero can benefit. It could be knowhow of quality and assembly of big bikes,” said a senior industry executive, requesting anonymity.

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