The Indian automobile sector swore by the environment at its annual convention on Friday. With global automobile giants like General Motors and Toyota increasing their bets on Indian market, projected to grow at 10% this year, the new president of the Society of Indian Automobile Manufacturers Pawan Goenka said environment issues have to be dealt with squarely by the industry.
?The auto sector should grow, but with responsibility,? Goenka, president (automotive sector) at Mahindra & Mahindra, told the media, after taking charge as Siam president.
The issue is significant as the carmakers lobby the government for continued tax breaks for the sector that has grown by only 1.3% in 2008-09, the slowest pace in the past seven years. But heavy industries minister Vilasrao Deshmukh has ruled out any more concessions, saying, ?We have given whatever we can this year to the automobile industry (by way of duty relief) and can only see what can be done when the next Budget is presented.? Deshmukh said this despite acknowledging the slowdown, particularly in the rural economy, which would hit sales of two-wheelers and medium vehicles.
?The industry, which is seeing an investment of over Rs 78,000 crore, is not out of the woods and needs support and encouragement,? Ravi Kant, vice-chairman, Tata Motors and outgoing president of Siam, said. Other auto industry chiefs attending the one-day convention also agreed that the domestic automobile industry is still not completely out of the recession blues as poor monsoon would impact vehicle sales.
China, Japan, and the US have offered a mix of credits, tax breaks and subsidies to boost auto sales in their countries by getting consumers to trade-in old cars for newer and more fuel-efficient models. Bloomberg data shows China?s passenger-vehicles sales rose 70.5% in July, the biggest gain since January 2006.
So far the Indian government has come out with three stimulus packages for the auto industry, giving it excise duty reductions and depreciation benefits. ?While there is no denying the fact that government measures like lowering excise duties and increasing commercial vehicle loans went a long way in helping the industry during the recession, there is a need to continue government-industry partnership to ensure that investments in the sector are used productively,? Kant said.
?The recovery has begun and the liquidity condition has also improved in the market. While the two- and four-wheelers markets have revived faster, commercial vehicles will take time. The light commercial vehicles have been performing well,? according to PM Telang, managing director, Tata Motors.