The heavy industry and public enterprises ministry is unable to fulfill the 100-day agenda, due to finance ministry?s reluctance to shell out money for Auto Component Development Fund. The fund was proposed to have a corpus of Rs 1,000 crore.

The department of heavy industries is again taking up the issue with finance minister Pranab Mukherjee, given that the fist 100 days of Vilasrao Deshmukh?s ministry will end by the end of September.

?We have sent the proposal through a pre-budget memorandum, which was rejected by the finance ministry. We are again pitching for it,? said Ambuj Sharma, joint secretary in the department of heavy industry.

The industry said it needs this fund to have a level playing field with competitors in countries like Thailand and China. ?We need this fund to compete with companies in Thailand and China, which get cheaper finance. I understand that the government has to contain the fiscal deficit, but it would be a big disappointment for us if the fund is not created and we would not give up,? Automotive Component Manufacturers? Association vice president Jayant Davar told FE.

On June 19, Deshmukh had announced that the government would set up the fund to finance the upgrade of the auto-component manufacturers through interest subsidy on loans for purchase of new plant and equipment. ?It is felt that such a fund would provide the necessary impetus for the modernisation of the industry and enhance its viability and competitiveness in the domestic and international markets,? the minister had said at that time.

The fall in demand and costly loans in the aftermath of the global economic slowdown starting last September resulted in low margin for the auto industry. Automobile sales in the domestic market remained flat during April-December 2008. The picture improved a bit in 2009-10, with a 16% rise in sales during April-August.

Five R&D centres for auto industry in 2 yrs

The government on Wednesday said it will build five research and development facilities for the automotive industry of the country in next two years and will also allow international firms to use them. This is part of the Centre?s target to set up seven state-of-the-art testing, validation, R&D centres under National Automotive Testing and Research and Development Infrastructure Project (NATRIP) with an investment of about Rs 1,800 crore during the 11 th five year plan that will culminate on March 31, 2012.