Auto stocks tumbled up to 6.5 per cent on Monday as investor sentiment were hit after decision to reduce tax rate on electric vehicles and proposal to hike registration fees for old and new vehicles.
Shares of Tata Motors plunged 6.52 per cent, Apollo Tyres 6 per cent, Bajaj Auto 4.99 per cent, Eicher Motors 4.56 per cent, Motherson Sumi Systems 4.34 per cent, TVS Motor Company 4.27 per cent, Maruti Suzuki India 4.26 per cent, Ashok Leyland 3.50 per cent, Hero MotoCorp Limited 2.61 per cent and M&M 2.07 per cent on the BSE.
The BSE auto index dropped 3.55 per cent to close at 15,610.93.
"Auto index corrected following the news that government proposes to hike registration fees on new vehicles," said Vishal Wagh, head of research, Bonanza Portfolio Ltd.
The government on Friday proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.
"The ministry has issued a draft notification for amendments to the CMVR (Central Motor Vehicles Rules) for providing a boost to electric vehicles, ensuring divyang friendly features in buses, and providing an enabling mechanism for scrapping of vehicles older than 15 years," Road Transport and Highways Ministry said in a statement.
For conducting test and the grant and renewal of fitness certificate for motor vehicles older than 15 years, the fee has also been increased.
Under this category, the draft notification proposes certificate renewal charges of Rs 1,200 for manual, and Rs 2,000 for automated vehicles under medium or heavy motor vehicle.
Meanwhile, the high-powered GST Council on Saturday decided to reduce the tax rate on electric vehicles (EVs) to 5 per cent from the existing 12 per cent, a move aimed at accelerating the adoption of eco-friendly mobility solutions.
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