FADA Urges RBI for Reforms to Improve Ease of Doing Business in Auto Retail Sector

The Federation of Automobile Dealers Associations (FADA) has submitted a comprehensive representation to the Reserve Bank of India (RBI), urging critical reforms to improve ease of doing business in the automobile retail sector.

Addressed to RBI Governor Sanjay Malhotra, the letter underscores the auto-retail industry’s ₹9 lakh crore contribution to India’s economy and its role as a major employment generator, with over five million professionals across 30,000 touchpoints nationwide.

FADA’s recommendations span nine key areas, including stricter enforcement of repo-rate transmission by private banks, consistent implementation of MSME lending benefits, inclusion of dealerships under the CGTMSE collateral-free loan scheme, and stopping direct incentive disbursements to dealership staff.

The association also urged recalibration of auto-loan risk weights, recognition of rural vehicle finance under Priority Sector Lending, rationalization of digital transaction charges, and greater credit access for electric vehicle adoption.

Citing a slow 2% growth in vehicle volumes in H1 FY26, FADA has proposed the formation of an RBI-led Auto-Retail Working Group and called for inter-ministerial coordination to unlock the full potential of India’s under-penetrated vehicle market.