It has been observed that the auto industry is going through a slump in demand since several months. In response to this, Heavy Industries and Public Enterprises Minister Praful Patel has said on February 14 that he would be meeting Finance Minister P. Chidambaram within the next two days in order to discuss a stimulus package for the sector. Praful Patel said that with rising fuel prices, high interest rates and global slowdown, there is immense pressure on automobile companies.
Expressing concern over the same, he said, “These companies are also working out a lot of ways to incentivise customers. But at the moment, the growth trend is not looking satisfactory. Passenger car sales in the country went down by a whopping 12.5 per cent to 1,41,083 units in December 2012. This is the steepest fall seen since the last four months.”
The Society of Indian Automobile Manufacturers (SIAM) has given some suggestions to rejuvenate the auto industry. It states that excise on cars other than small cars should be reduced to 20 per cent. It also said that the duty on 10-13 seater vehicles should be the same as that on buses (10 per cent). The association has also asked the government to give concessions on the parts of electric and hybrid vehicles. This move would help in the development of more environment friendly vehicles, apart from the Mahindra Reva e2O, which would be launched soon after the 2013 Union Budget.
As per the current scenario, observed after January 2013 manufacturing data released by SIAM, it appears as the industry may fail to meet any growth targets in the current fiscal. A forecast of 0-1 per cent growth for the fiscal was issued by SIAM earlier. Nevertheless, with the increase in prices of diesel and LPG, it is hoped that the fuel price correction may help in rejuvenating the sagging auto industry to an extent.