The auto sector needs a focused stimulus package, including a 10 per cent cut in GST rate and financial incentives in the scrappage policy, a parliamentary panel report has said.

The automotive sector suffered Rs 2,300-crore loss per day and an estimated job loss of about 3.45 lakh because of the pandemic and the subsequent lockdowns.

The cost of BS-VI vehicles is expected to be higher by 10-15 per cent because of the upgraded technology. The panel is of the view that cutting the GST rate to 18 per cent from 28 per cent will bring down the cost of vehicles substantially, creating more demand for newer vehicles. The increased sales because of the GST rate cut will cover up the loss in revenue.

Further, the panel suggested provisions for financial incentives in the scrappage policy to encourage end users to discard their old vehicles and buy new cars.

Meanwhile, the Automotive Component Manufacturers Association of India has said the auto component industry has seen a year-on-year growth decline of 34 per cent in the first half of 2020-21.