A Good Monsoon Will Trigger Investments
To be a part of the Indian automotive industry for four decades has been a very rewarding journey, feels Padma Bhushan awardee R C Bhargava, chairman, Maruti Suzuki. In an interview to ET NOW, he talks about the issues, especially pollution, dogging the industry. Edited excerpts:
Issues Auto Sector is Facing The entire automotive sector contributes 47% to the total manufacturing activity in India. In terms of bringing new standards of quality and productivity and manufacturing practices, the autoindustry has always been in the forefront.
Unfortunately in India, many people are confused about pollution and the causes of pollution. In India, the biggest issue is dust, particularly the PM 2.5 level of dust. Because of that the auto industry is facing challenges which are possibly going to hurt its growth. Bumpy Ride Ahead We have never had a linear curve because there have been ups and downs always. I think they will continue, but this present challenge I think is a new man-made challenge, because it arises largely from people’s preset ideas and prejudices. It is not based on facts. If you look at the report of IIT Kanpur, it clearly brings out that cars constitute just about 2% of the PM 2.5 loads in Delhi’s air. Just 2%, but if you hear peo- ple talk, you would not believe that.
Impact of Good Monsoon Each time there is a good monsoon in India, the economy picks up, inflation comes down, rural sales take off and it is a win-win for everybody. One of the requirements for investment-led growth is a pick-up in the demand for products and there are lot of unutilised capacities. What the monsoon will do is to bring about pick-up in the demand, and once that happens, then there will be better capacity utilisation, inventories will run out and it will lead to an overall climate where people will be more prepared to make investments.
Maruti Suzuki’s rural performance In 2015-2016, the rate of growth of sales in the rural areas had slowed down substantially. We were growing before this at about 22-24% in the rural areas. The growth in this last year has halved to that. I expect with a better monsoon it’ll pick-up.
Change is Constant The success of any company depends on its ability to foresee changes and to adapt in time. Whether it is stricter emission standards; whether emission standards will lead towards hybrid cars or electric cars, these are all issues which the industry is facing today and will have to take a decision which way we are likely to move.