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MSMEs

Published on: Sept. 20, 2020, 11:25 p.m.
Automobile manufacturers see revival on the cards
  • Driving down the long road

By S.M. Boothem

The recently concluded 60th annual convention of the Society of Indian Automobile Manufacturers (SIAM) under the theme ‘Rebuilding the Nation Responsibly’ saw active participation by the Union cabinet ministers Nitin Gadkari, Prakash Javadekar, Piyush Goyal and captains of the automotive industry and trade associations, with a series of virtual sessions deliberating upon the revival and future of the automotive industry.

In the inaugural session, Prakash Javadekar, Union Minister of environment, forest & climate change, information & broadcasting and heavy industries & public enterprises assured the automobile industry of support from the government in reviving demand, which has taken a dire hit owing to the Covid-19 pandemic. “While we thank the government for all the support it has extended to the auto sector, such as reduction in the repo rates and credit access, we now need more specific steps to boost demand in the sector, as the festive season is fast approaching. Some of the key issues include lowering of GST rates from 28 to 18 per cent across all vehicle categories and automotive components, an incentive-based vehicle scrappage policy and taking concrete steps towards realising the vision of the Automotive Mission Plan,” said Rajan Wadhera, president, SIAM and senior advisor, Mahindra & Mahindra.

“Infrastructure is the only answer to the growth story of India and the government is looking at investing Rs100 lakh crore towards infrastructure projects over the coming times. This will also benefit the automobile industry,” added Javadekar. “In the last several months, the government has shown sensitivity to lives, livelihoods and the overall economy. Now is the time for the government and the industry to join hands and work in partnership, to salvage the current slump,” commented Uday Kotak, president, CII and MD & CEO, Kotak Mahindra Bank.

“The industry is looking forward to sound development, which means increase in production, sales, exports and more localisation of parts, including electronics,” said Kenichi Ayukawa, president elect, SIAM and MD and CEO, Maruti Suzuki India. Some of the other key issues discussed in the session included improving the ease of doing business in the country and the steps that are to be undertaken to create ‘Brand India’, so as to harness the country’s export potential. According to SIAM, the auto sector has been growing at a CAGR of 16 per cent over the last 25 years, which is truly an impressive number to reckon with.
 
Regulatory roadmap

The sector has made sizeable investments in R&D and currently employs around 37 million people in the entire value chain. Going forward, the industry will look at augmenting exports, reducing imports, creating more jobs and increasing investments in R&D. In the automotive components space, imports are to the tune of Rs1 lakh crore and the industry is looking at reducing this number in four to five years. For this to happen, component manufacturers need to rethink, re-strategize, reorganise and implement steps such as reducing current logistics costs, relaxing duties and taxes, entering into FTAs and similar other trading prerequisites with bigger automobile markets.

“As a regulatory minister I cannot be more satisfied. We uphold the need for a long-term regulatory roadmap and infrastructure development for the benefit of the automobile industry. It is time the country also focuses on alternative biofuel technologies such as that of ethanol, methanol, LNG, and so on. Also, I recommend that SIAM and the industry create an independent thinktank of retired industry, legal, policy, and government experts to resolve industry challenges,” said Nitin Jairam Gadkari, Union Minister of Road Transport & Highways and MSME. The government has invested heavily in road infrastructure including 22 green express highways, and is focusing on road safety guidelines, as well as working on alternative, cleaner fuels.    

Some prominent industry personalities, including Vikram Kirloskar, VC, Toyota Kirloskar; Vinod Aggarwal, treasurer, SIAM and MD and CEO, VE Commercial Vehicles and Dr Pawan Goenka, MD, Mahindra & Mahindra, shared their views on the industry’s current scenario and the way forward. The industry achieved the landmark feat of transitioning to BSVI Emission Norms from 1 April 2020, across all vehicle segments, bringing India at par with rest of the world, while meeting one of the most stringent environmental regulations for vehicles.

“I have personally witnessed many marathon meetings across many industry sectors and government on localisation. I am also very grateful to Piyush Goyal for recognising the auto component industry as a champion sector that maximises its potential in exports,” said Deepak Jain, President, ACMA and CMD, Lumax Industries, at the concluding session.

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