The Indian automobile industry, which is currently experiencing one of the worst slowdowns it has ever seen, received a fair bit of assurance from the government to help it tide over troubled times.
Speaking at the Society of Indian Automobile Manufacturers (SIAM) Conclave in New Delhi today, Nitin Gadkari, Union minister for Road Transport and Highways, assuaged industry stakeholders that petrol and diesel-engined vehicles will not be banned albeit the country's huge crude oil import bill and high levels of pollution remain a concern. While the Rs 7 lakh crore fuel import bill hurts the country's economy, India loses out on new investment and also sees its image impacted due to the high levels of pollution in certain regions of the country.
Gadkari also pointed out that India has far more road accidents than other nations. Annually, there are over 500,000 road crashes and over 150,000 fatalities with nearly 65 percent of them belonging to the 18-65 age sub-group, which impacts the country's future.
On a positive note, he said that MoRTH is to commission 68 projects covering Rs 5 lakh crore worth of road projects in the next three months. This will give a huge impetus to the construction equipment industry, and in turn to teh M&HCV sector, which is seen as the barometer of the economy.
Commenting on the banking system, he said private national banks are not funding government projects and asked the auto sector to appoint finance advisors collectively, adding that auto companies can start their own finance bank to fund car buying, thereby giving a new charge to sales. He pointed out that small scale banks have close to Rs 2.5 lakh crore of funds available per bank and auto companies must tap those banks and scheduled banks.
As regards the commercial bus sector, Gadkari said the bus population in the country has to increase. By adopting the London public transport model, new demand could be created for nearly 12-15 lakh buses. He said that state governments have been told to aggressively market their transport corporations. Meanwhile, private manufacturers must launch their own public transport bus fleets. Gadkari reiterated that electric buses run at Rs 55 a kilometre against Rs 65 for ethanol and Rs 115 for diesel.
He said the governmenyt will decide on incentivesfor export promotion of automotive goods: "We're looking for incentives in exports & are in talks with the Finance Ministry to improve export figures. Be quality-centric, not cost-centric. India's auto industry has the best export & employment figures. I urge the automotive industry to be positive."
Gadkari acknowledged that India's auto sector is in need of help. He assured industry stakeholders that he will take up SIAM's request to reduce GST (from the existing 28%) on petrol and diesel vehicles with Finance Minister Nirmala Sitharaman. He said the ongoing slowdown in the domestic auto industry is not just a worry for the vehicle manufacturers but also for the government and the country.
Rajan Wadhera soeaking at the SIAM Conclave today.
Speaking earlier, Rajan Wadhera, president of SIAM, said: "The auto industry is going through a difficult time and the stress visible across the automotive value chain. Passenger sales have dropped 23.5 percent in April-July, 15,000 contractual workers laid off and FADA India estimates 280,000 jobs have been lost."
Wadhera urged the government to reduce GST on automobiles to address price increase arising out of BS VI norms. He also suggesteds appointment of a single nodal agency for finalising auto sector policies.
Wadhera added, "The industry is hopeful of substantial solutions by the government to end the industry’s distress."