The government will respond to the demands of the automobile industry, said Finance minister Nirmala Sitharaman on Tuesday as the sector reported the 10th straight month decline in passenger vehicle sales.

Companies have asked for a cut in Goods and Services Tax rates on automobiles, which have the highest tax rate of 28%, but Sitharaman said the GST Council will decide the matter at its meeting in Goa on September 20.

"We are working with all the sectors across the country to understand the problem and taking measures also. This government listen to everyone and we are also taking measures. Two major announcements were made in August and September and two more expected," Sitaraman said in Chennai.

“We are conscious that we need to respond," Sitaraman said.

Domestic sales of passenger vehicles fell 31.6 per cent year-on-year to 196,524 units in August, according to the data released by the Society of Indian Automobile Manufacturers (Siam). That’s the steepest decline since 1997-98 when Siam started recording data.

Two-wheeler sales — a key barometer of the rural economy — also dropped by 22.24 per cent to 1,514,196 units against 1,947,304 units in the same period last year. Companies, wary of piling inventory, resorted to holding onto their stock. They also cut production, which led to a decline in dispatch to dealers.

Sitharaman was addressing the media on the National Democratic Alliance (NDA) government’s 100 days at office in its second consecutive term while presenting a report card.