Indian auto industry facing one of the toughest times in history, needs govt support: Maruti Suzuki India MD

The Indian auto industry is facing one of the toughest times in history and needs government support through reduction of GST and incentive-based scrappage policy, Maruti Suzuki India Managing Director and CEO Kenichi Ayukawa said.

New Delhi: The Indian auto industry is facing one of the toughest times in history and needs government support through reduction of GST and incentive-based scrappage policy, Maruti Suzuki India Managing Director and CEO Kenichi Ayukawa said on Friday.

Ayukawa, who is the president-elect of auto industry body SIAM, said the sector has been "set back by many years" by a combination of the coronavirus pandemic and the slowdown that has been going on since last fiscal.

As the global health crisis broke out, he said, the auto industry in India also played its part by getting into manufacturing of ventilators, Personal Protective Equipment (PPEs) and importing testing kits from abroad to fight the virus although sales have been hit hard.

"In August we can say we just came back on our feet to achieve performance comparable to last year. Also last year is not a good comparison as the industry saw negative growth of 15-25 per cent. This negative growth has set back the industry by many years," Ayukawa said at the 60th annual convention of Society of Indian Automobile Manufacturers (SIAM) conducted online.

Reiterating the long pending demand of the auto industry to reduce Goods and Services Tax (GST) on automobiles by 10 per cent, Ayukawa said, "we are facing one of the toughest times in history. The industry needs your support".

"We are eagerly waiting for GST reduction and scrappage incentive scheme. We believe that taxes on the increasing turnover will be more than the government expenditure on the scrappage scheme and GST reduction," he said.

He thanked heavy industries minister Prakash Javadekar, who assured the gathering that he will take up the matter of GST reduction with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.

Ayukawa also said the growth witnessed in the last couple of months is on a very low base of last year and "we are also not sure whether this is sustainable in future" while festival demand is very important.

"So, at some point of time we definitely need some support from the government," he said, adding the industry is waiting for a government decision to encourage demand.

Ayukawa said maximising production and increasing sales volumes of the auto industry can help in generating tax revenue, which the government can put to use for funding welfare initiatives.

In the next two years, he said the Indian auto sector will focus on "building the nation responsibly, through sound development of the industry".

Sound development of industry would mean increase in production and sales volumes, exports, more localisation of parts, including electric vehicle components and make India self-reliant or Atmanirbhar Bharat.

Auto industry not in position to make further investments for new norms: SIAM

Auto industry body SIAM said that manufacturers were not in a position to invest further in the implementation of upcoming government regulations as the sector was going through an extremely difficult period.

Society of Indian Automobile Manufacturers (SIAM) also noted that government support was required to pursue the targets set under the Automotive Mission Plan 2026 (AMP 2026).

"For (implementation of) upcoming regulations, investments are very steep and the commensurate revenues have not been realised by the industry due to lack of consumer demand," SIAM President Rajan Wadhera said while speaking at the industry body's annual convention here.

So, the industry does not have the ability to invest further into the implementation of new regulations like Corporate Average Fuel Efficiency (CAFE) norms from 2022 onwards, he noted.

Wadhera also said that there should not be an overdose of regulations as India's emission standards are already at par with the strictest in the world.

Seeking government support to offer some form of demand boosters, Wadhera said: "We feel that whatever we are talking on reviving demand will provide the required push to consumers to come to dealerships."

He noted that demand stimulus for the industry is a must in order to achieve targets listed in AMP 2026.

AMP 2026 is the collective vision of the government of India and the automotive industry on where the various segments of the automotive and auto component industry need to be by 2026 in terms of size and contribution to the overall Indian economy.

The plan envisages taking the auto industry's gross domestic product (GDP) contribution to 12 per cent from current 7 per cent as also generating 6.5 crore additional jobs over the 3.7 crore jobs that are already there.

It also targets to enhance vehicle production to 6.6 crore units by 2026.

"We were almost on course (for the AMP 2026), but in the last two years we have only reached (volume of) 2.6 crore vehicles... we strongly feel that if we want to stay on course on the plan, demand stimulus is required," Wadhera said.

AMP 2026 is important for the industry as it would enhance the scale of the sector, and that in turn would bring in competitiveness making the vehicles cheaper, allowing for increase in exports, he added.

Banks ready to lend for purchasing vehicles; no issue in terms of fund availability: Uday Kotak

Noted banker Uday Kotak said there is no issue in terms of availability of money for vehicle finance and that banks are ready to lend for vehicle purchases.

Kotak -- Managing Director and CEO of Kotak Mahindra Bank, and President of industry grouping CII -- also urged the government to address supply side bottlenecks being faced by the auto industry amid the coronavirus pandemic.

Speaking at the special plenary session of the 60th annual convention of Society of Indian Automobile Manufacturers (SIAM), Kotak said the partnership between the government and industry is "key to coming out of the current uncharted times".

"At this time, I don't see any issue of availability of money, which is available in plenty. Banks are ready to lend for vehicles if there is a demand for that. So at this stage, I don't see there is any issue either on the rate of interest or the availability of money (for vehicle finance)," he said.

While emphasising that the banks are "ready, willing and eager to (finance)", Kotak said, "what we need to ensure is proper consumers with a reasonable credit history."

Long-term policies, stable regulatory roadmap required for auto sector: Toyota

A stable long-term regulatory roadmap and policy framework is required for the domestic auto industry, which is currently reeling under a prolonged slowdown, Toyota Kirloskar Motor (TKM) Vice Chairman Vikram Kirloskar said on Friday.

Speaking at SIAM annual convention here, Kirloskar said long-term policy framework is important to safeguard industry competitiveness.

"Today we stand at crossroads with various technological pathways and alternate energy options available for cleaner, greener sustainable future. We need to pause and revaluate our options keeping in mind the recent geopolitical developments, ultimate national objectives including building a self-reliant India and safeguarding industry competitiveness," Kirloskar said.

Based on this, it is essential that a long-term stable regulatory roadmap and policy framework is created for the sector, he added.

The auto industry had built a lot of resources over the years but in this one year it lost almost all of it, Kirloskar said.

"In the future, as we go along, there should be long-term plans for the automotive segment.. it would help this industry reach the pinnacle of the economy once again," he added.

Kirloskar, however, sought a relook at timelines of upcoming regulations due to the ongoing slowdown and COVID-19 situation.

"As an industry we have always requested that there should be no changes to regulations once they are decided and notified. However, the adverse impact of the pandemic on the industry is unprecedented and it warrants a relook at timelines of future regulations like fuel efficiency norms and BS-VI second phase," he noted.

Policy interventions and regulations should focus on larger national imperatives and be technologically neutral, Kirloskar said.

Globally this approach has given good results, he added.

"One good example is linking taxation to fuel efficiency and carbon emissions, this is a simple transparent and impactful approach," Kirloskar noted.

He added that the government should also come up with a national fuel road map.

"Given the multitude technologies for cleaner alternative fuel options, having a comprehensive integrated national fuel road map will help industry make informed investment decisions," Kirloskar said.

As the auto sector traverses through this turbulent phase, it is fully confident of the continuous support of the government in taking necessary steps to revive the economy, he noted.

(PTI Report)