Budget 2020: 'Overregulation' killing auto industry, says Rajiv Bajaj

The automobile industry is facing a protracted slowdown because of “overregulation”, and the upcoming Budget is unlikely to address its woes, Rajiv Bajaj, managing director of Bajaj Auto, said on Tuesday. 


“In my view, the single most important reason responsible for the current state of affairs the industry finds itself in is overregulation. It’s overregulation that is killing the industry,” he said on the sidelines of an event in Mumbai, where the company revealed the prices of the e-Chetak.  


Bookings for the company’s maiden offer in the electric segment, with prices starting from Rs 1 lakh, will open on Wednesday and deliveries will commence by the end of February from select KTM outlets in Bengaluru and Pune. 


Bajaj had unveiled the scooter on October 16 in Delhi. The Chetak can run up to 95 km on a single charge when ridden in economy mode. A slew of regulations on safety, insurance, and emissions over the past one and a half years have made two wheelers (150cc and above in the mass segment) dearer by almost 30 per cent, hurting demand.


Bajaj’s remarks come against the backdrop of one of the most prolonged slowdowns plaguing India’s automobile market, amid a slowing economy and dipping consumer confidence. Passenger vehicle sales have been on a decline for the past six quarters, while two-wheeler sales have been skidding for four quarters. Sales of motorcycles and scooters fell 15 per cent in the December quarter. 


“What purpose is served by making insurance mandatory for everyone? As if people can’t think for themselves. The government has to think on our behalf. We can’t make simple choices,” said Bajaj, alluding to the insurance regulator’s diktat in September 2018, which mandated an upfront payment of premium for five years for third-party liability.   


Bajaj also questioned the need to make ABS (anti-lock braking system), a safety feature, mandatory for two-wheelers. 

According to him, given the state of India’s roads and traffic congestion where one struggles to go beyond 20 kmph, imposing the ABS (on bikes that are 150cc and above), which increased prices by Rs 8000-10,000, made little sense. 


“In my view it is completely over the top,” he said. 


Bajaj also pointed out that rather than bringing in BSVI, which will further increase prices of two-wheelers, a mechanism to scrap old polluting vehicles would have helped. While he welcomed the government’s move to reduce goods and services tax (GST) on electric vehicles to 5 per cent from 15 per cent, Bajaj said bringing down the GST on two-wheelers with internal combustion engine from 28 per cent to 18 per cent, at least for some time, would have helped in off-setting the cost increase. “These are the real issues on the ground,” and unless these are addressed, problems facing the industry will remain, he said.