No Ban On Diesel, Petrol Vehicles: Nitin GadkariThe announcement is likely to boost auto sales which has been falling for the past 13 months

At a time when auto sales have plummeted and customers are jittery about new purchases especially given the Centre's emphasis on electric vehicles, Union transport minister Nitin Gadkari on Thursday said the government does not plan to ban petrol and diesel vehicles.

The statement may soothe the nerves of automobile manufacturer who are battling probably the worst slowdown in several years that has led to several carmakers announcing plant shutdowns and production cuts. Most notably, Maruti Suzuki has announced to shut down its operations for two days in September at its Gurugram and Manesar plants.

The announcement by Gadkari is among the several measures announced during the past few days to boost the auto sector which contributes 7% to the country's gross domestic product.

The government will look at cutting goods and services tax on petrol- and diesel-run vehicles, in line with electric vehicles, Gadkari said at an event organized by the Society of Indian Automobile Manufacturers (SIAM). He acknowledged that the automobile industry is in trouble and needs support.

SIAM has also sought a scrappage policy and the government is likely to soon come out with one.

To boost automobile sales which has been falling for the past 13 months with August sales plummeting 30%, the government has also clarified that all BS IV vehicles will be allowed to ply till the end of their lives. Starting April 1, 2020, only BS VI vehicles will be registered as the country moves towards using the cleanest fuel grade available across the world. The transition period has led to many buyers push back their buying decision.

The issue of low sales volume has been compounded due to lack of liquidity and credit in the market, especially due to stress among the non-banking financial companies. SIAM believes that given that two-wheeler as well as tractor sales have also been falling even in August, measures announced by finance minister Nirmala Sitharaman last month have remained ineffective.