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NEW DELHI (Reuters) – India will not ban vehicles running on petrol or diesel and is considering cutting taxes on hybrid vehicles, Road Transport and Highways Minister Nitin Gadkari said on Thursday.

India’s Transport and Shipping Minister Nitin Gadkari is pictured in his office in New Delhi, August 26, 2015. REUTERS/Anindito Mukherjee/File Photo

His remarks come at a time when India’s automobile sector is battling a bruising slowdown and manufacturers fret about the impact of the government’s plans to get the industry to switch to electric vehicles.

“The government has no intentions of banning the production or stopping the existing petrol and diesel-fuelled vehicles,” Gadkari said at an industry event in New Delhi.

Indian auto stocks rose in afternoon trading following Gadkari’s remarks on the tax cuts, with shares in Tata Motors Ltd gaining 5% and those in Maruti Suzuki India Ltd rising 1.8%.

The slowdown in demand for automobiles, made worse by a liquidity crunch among India’s shadow banks, has forced major automakers to halt production and lay off thousands of workers.

Maruti Suzuki is shutting its passenger vehicle manufacturing factories in Gurugram and Manesar in northern India for two days this month, it said on Wednesday.

This is the first time India’s largest carmaker by market value is halting production due to lack of demand at both those plants, a source familiar with the matter told Reuters on Thursday.

The company last faced major shutdowns in 2012 when a factory manager died due to violence at its Manesar plant, but its Gurugram plant had functioned as usual, the source, who was not authorized to discuss the matter with the media, said.

Mahindra and Mahindra Ltd, another top automaker, has cut some 1,500 jobs or about 5% of its workforce, and could lay off more workers if the slowdown persists, Managing Director Pawan Goenka said.

The company also plans to defer 10% of its capital expenditures or as much as 10 billion rupees ($140 million) this year as it cuts back on production, Goenka, speaking at the New Delhi event, said.

Separately on Thursday, Tata Motors Ltd said in a statement it had slashed vehicle production in August by 52%, the steepest cut in years by the country’s largest automaker by revenue.

($1 = 71.4920 Indian rupees)

Reporting by Aditi Shah and Sudarshan Varadhan in New Delhi, Writing by Sachin Ravikumar; Editing by Sherry Jacob-Phillips and Rashmi Aich

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