AUTO INDUSTRY LEADERS MEET FM, SEEK SUPPORT
Automakers met Finance Minister Nirmala Sitharaman on Wednesday and sought immediate steps such as liquidity boost and relaxation of credit facilities for retailers as well as GST cut to give a fillip to sales, which have been in decline for more than 18 months.
This is the first meeting top guns of the industry had with policymakers after formation of the new government. They fear job losses if no steps are taken immediately.
However, no concrete proposals came out of the hour-long meeting, which saw participation from R C Bhargava, chairman of Maruti Suzuki, Pawan Munjal, chairman and managing director of Hero MotoCorp and Gurupratap Boparai, managing director of Volkswagen India, among others. Heavy Industries Minister Arvind Sawant and NITI Aayog Chief Executive Officer (CEO) Amitabh Kant were also present in the meeting.
According to a source, the government wanted to understand from the industry about the reasons of the ongoing slump in demand and possible solutions to the problem. He said that the heavy industries ministry was supportive.
The industry broadly presented factors such as issues regarding availability and affordability of financing, increasing cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt the demand.
“We have told the government that if any concrete measures are not taken, the industry will be forced to do immediate job cuts,” an executive, who attended the meeting, said.
“Employment is a big concern and there is a huge risk of job losses. They are happening among suppliers, dealers and unorganised players
such as roadside garages. Of these, original equipment manufacturers will be the most reluctant to cut jobs because of their moral responsibility towards the society. But if this situation continues then we have to start resetting the production lines,” the person said.
The industry also reiterated that the pending notification on increase in vehicle registration fees should not happen as the sector is already reeling from stress of low demand.
“The government was in a listening mode today. They heard our concerns and promised to come out with concrete steps in the next few weeks,” Saharsh Damani, CEO of Federation of Automobile Dealers Association (FADA), a lobby group of dealers said.
According to Damani, one of the primary requests was asking the banks to relax lending terms for dealers.
State Bank of India (SBI) has tightened lending terms dramatically for auto dealerships, seeking to reduce its exposure to risk from a sector in the midst of a sharp downturn.
The industry has been going on a prolonged slump. Passenger vehicles segment has been the worst hit, with sales continuing to decline for almost a year now. According to figures from Society of Indian Automobile Manufacturers (SIAM), vehicle wholesale across all the categories declined by 12.35 per cent to 6,085,406 units in April-June against 6,942,742 units in the same period of last year.
FADA has stated that nearly 200,000 jobs have been cut in the past three months. “Yes, we have asked for certain enablers for the auto industry and they have thought on it. I am hopeful that there will be a stimulus package coming soon,” Rajan Wadhera, president of SIAM, said.