The Government Backtracks

The Finance Ministry's big press conference on Friday had a bit of everything. But most importantly it was about backtracking and fixing the needless mess the government piled on itself a few months back

The Automobile Fix  🚗🔧

So off late, there’s been considerable chatter about an EV (Electric Vehicle) revolution that’s supposedly going to sweep the streets of India. Especially, with the government introducing policies to slowly nudge both manufacturers and consumers into thinking electric and more long term.

However all that changed on Friday and electric is no longer the new game in town.

So what exactly happened?...

Okay, let me break this down for you. For almost a decade now, Indian vehicles have been running on engines that conform to a certain emission standard called the Bharat Stage IV. Its basically a set of restrictions on different classes of vehicles stipulating the legal amount of pollutants each vehicle can emit 💨

Stricter norms means less pollution and as air quality across India continued to deteriorate, the government rightly pointed out that it was time to switch to more environmental friendly emission norms.

And given the grave threat facing India's ecology, they actually decided to speed up the process for once, by skipping BS-V norms entirely, instead urging manufacturers to move to BS-VI directly. Bold 👍

Anyway, soon enough, the Supreme court joined in on the action as well and said it was going to ban sales of BS-IV vehicles post 2020. And that's when manufacturers realised it was best they prepared for the future. And prepare they did.

With massive investments needed to manufacture these new engines they drew out elaborate plans to slowly phase out sales of vehicles build on this old tech (conforming to BS-IV norms) and replace them with the more swanky, albeit pricier engines (conforming to BS-VI norms) .

Until that is, the government started to talk about an all electric future. Surprise Surprise!!! 😯 Didn't see that one coming did you?

And this is when the nudging began

First it was speeches, by prominent ministers discussing and promoting the electric future, which by all account is still a few years away. Then, the government decided to release a draft notification with a proposal to hike registration fee on all vehicles running on fossil fuel, further dissuading consumers thinking about buying a new vehicle.

Finally there were rumours about phasing out vehicles running on BS-IV engines by reducing the validity of the registration certificate. Whispers about the registration period being curtailed from 15 to 10 years slowly began making the rounds.

I mean, if people thought their new Maruti Suzuki Swift with a registration period of 15 years was only going to be valid for like 10. Why would they buy a new one now? Wouldn't they wait it out? And what happens to the already crippled automobile sector when hordes of people postpone their purchase decision. It doesn’t take a genius to figure out this. Although the government never confirmed these rumours, they never denied it either.

And this was the last straw for most manufacturers. After having poured their heart and soul and a lot of money into building the infrastructure needed to make their vehicles BS-VI compliant, they were now being asked to move to EV all of a sudden.

So they revolted ⚔️

Okay, not revolted. More like lobbying.

Anyway, after some lobbying by prominent Auto Moguls and criticism from the public about the government's apathy, the Finance Ministry finally succumbed on Friday.

Outcome

First thing's first. About the proposed draft notification with the registration hike. Yeah, the government said that it’ll only think about it in 2020.

Those unfounded fears about the government tinkering with the registration period of BS-IV vehicles. They denied it outright.

To top it all off, they also lifted a temporary ban on government purchases of new vehicles to give that little extra boost

There were also a few other things about policies regarding scrapping old vehicles and stuff. Yeah, you can read more about it here.

Onto the next story now

Be Responsible

The next backtrack was regarding CSR (Corporate Social Responsibility) spending. So if you don't know this already, there’s a mandate for all corporates based out of India to spend a small part of their profit on certain social activities. Because you know, it's good for the community 🧑‍🤝‍🧑

Anyway, the government recently figured it was a good idea to poke around a bit here and said it was thinking about imposing heavy fines including imprisonment for the managers responsible, if a company fails to spend the required amount. Yeah... Imprisonment.

This obviously did not go down well with most people and they, much like everybody else revolted.

Until the government was forced to clarify on Friday that all matters regarding CSR was going to strictly remain a civil offence and not a criminal one, ergo, no imprisonment for anybody. Hurray!!! ✊

FPI Surcharge Gone

The final backtrack was on the FPI surcharge and at this point we have covered this matter so many times that it's become a bit of a dead rubber. So we will just leave this and this here, so that you can get up to speed about the whole matter.

The Rise of Mr. Jaitley

Unfortunately, Saturday also saw the passing of the former Finance Minister Mr. Arun Jaitley and we did this little info-graphic as a tribute. Hope you like it.

Also, sharing is caring. If you think you know of someone who needs this newsletter, share this on WhatsApp using this link or may be just forward this email.

That is all for the day folks! Until tomorrow..