Indian auto sector seeks special package to rescue industry from Covid-19 crisis
Several carmakers and auto industry bodies have come out in support of PM Narendra Modi's decision to infuse a ₹20-lakh crore economic package announced on Tuesday. Many of them now wants to see a specific package from the government aimed to revive the auto industry that is trying to emerge from the setback of the coronavirus pandemic and a slowdown that hit the industry since last year.
The Indian automobile manufacturers body SIAM hopes Finance Minister Nirmala Sitharaman would come out with a focused package to support the auto industry when she announces the details of the package.
"India has delivered in the fight against Covid-19 on the medical front. Now, the promise of ₹20 lakh crore comprehensive economic package announced by the Hon'ble Prime Minister, focusing on economic activities and an overall aim of a self-reliant India, will provide the right boost to demand and growth of our economy once again," SIAM President Rajan Wadhera said in a statement.
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Wadhera also said that the auto sector is "a strong pillar of Make in India with huge contributions to GDP (gross domestic product) and employment and relies on its highly indiginised supply chain".
"We are hopeful that a focused package to support the Indian automotive industry would be announced by the Hon'ble finance minister, when she announces the details of the package," Wadhera said.
Mahindra and Mahindra's managing director Pawan Goenka said PM Modi has caught the attention of carmakers with the ₹20 lakh crore number.
"We cannot be hostage to the virus and need to get on with our lives. We have to start buying local and be vocal about it," Goenka, a part of the conglomerate with a global footprint, said in a tweet.
Anand Mahindra, Chairman of the Mahindra Group, has heaped praise on Prime Minister Narendra Modi after his approximately 30-minute address to the nation on Tuesday evening in which he outlined the need to make India self-reliant and the ₹20 lakh crore special economic package.
"This was the PM’s Carpe Diem (Seize the Day) speech; an opportunity to change the narrative from ‘Survival’ to ‘Strength.’" he wrote on Twitter. "We will know tomorrow whether or not this is going to be a transformational moment like 1991. What I also believe is I won’t get much sleep tonight!"
In a statement on Wednesday, TVS Motor Company Chairman Venu Srinivasan said the government must prioritise in aiding the small, medium and micro industry employees and facilitate a direct benefit transfer to employees in unorganised and small scale sectors. He said the Government must also ensure 'credit backstop' for micro, medium and small industries so that they do not go into cash crunch. "Demand is the key to drive the market and it is essential to inject confidence in the economy for people to come out and buy", he said.
Srinivasan noted that the auto-industry is a strong pillar of the economy with huge contributions to GDP and employment and expressed confidence that the stimulus package would infuse positive sentiment in the industry in the long run.
Ashok Leyland MD and CEO Vipin Sondhi feels that the stimulus package can help the commercial vehicle industry in battling out of the ongoing crisis and boost demand. He was quoted by PTI saying, "While we await the details, the announcement of the reforms-cum-stimulus to the tune of 10 per cent of GDP… has the potential to be sustainably beneficial to all sectors of the economy."
Indian carmakers suggested several steps to revive the industry, like a temporary tax cut on cars, trucks and motorbikes as well as incentives to scrap old vehicles. In a statement earlier, SIAM had said that carmakers want a temporary, 10% cut in tax on the sale of all automobiles and auto parts and incentives, in the form of tax rebates, for car owners to scrap their old vehicles.
While Minister of Road Transport and Highways Nitin Gadkari has assured a vehicle scrappage policy for India soon, there is no assurance on other demands made by the industry so far.
Passenger vehicle sales in India fell 18% in the year to end-March 2020, their steepest recorded fall in years, after weak economic growth in the country over the last year. April was particularly bad for the industry with most carmakers failing to sell a single vehicle in the entire month.
(With inputs from agencies)