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: The current slump in all segments of the automobile sector, as also the closure of several auto ancillaries in the SME segment, has resulted in a pall of gloom descending on this industry. The slump in this sector, ironically, comes at a time when global fuel prices are at record lows and one would expect buyers to queue up in hordes, especially with the government recently announcing a reduction in Cenvat and a cut in the prices of petrol and diesel, modest though it is and an accelerated depreciation of 50% on commercial vehicles to be purchased from January 1 to March 31, 2009. But despite these measures, the pessimism appears to continue and the current nation-wide strike by truckers indicates that industry is not exactly gung-ho yet.

With export orders slowing down, large companies like Tata Motors and Ashok Leyland are already on partial closure and this, in turn, is causing thousands of ancillary units in the SME sector to shut shop. How then, do we revive this sector, which has been the forerunner of industrial growth for the past few years?

Very clearly, the revival of internal demand is the answer. To start with, state governments need to place bulk orders on bus manufacturers like Ashok Leyland and Tata Motors for modernising and expanding the fleet of state-owned transport companies.

With the corporate sector already tightening its belt and the loss of jobs curbing consumption expenditure, public transport will see a surge in demand, if the various state transport corporations and city bus services can get their act together. You only have to walk the streets of Delhi, Bangalore, Kolkata or Chennai and what do you see? Jam-packed, ramshackle buses belching smoke, with passengers even clinging on at the back. There is obviously a great demand for more buses and with pay packets and consequently demand for quality services on the rise, modern fuel-efficient fleets should be the order of the day. Strict implementation of the Supreme Court directives on phasing out old vehicles, with clear instructions to all state governments to expand and modernise their fleet should, therefore, be the first step towards reviving the bus industry.

If every state road transport corporation can almost replace it's fleet, one can just imagine the rejuvenating effect it will have on the heavy vehicle industry. The defence services can similarly modernise and increase its fleet of trucks.