Budget 2008: Automotive industry wish list

28 February 2008

Sourya Biswas evaluates the expectations of the automotive industry from finance minister Chidambaram on the 29th of this year.

The upward mobility of a country is often determined by the lateral mobility of its citizens, moving about in their own vehicles. Long gone are the days of yore when the waiting period for a Bajaj Chetak exceeded a year, and in cars one could choose only between the Hindustan Motors Ambassador and the Maruti's boxy 800, with a Fiat thrown in for variety.

The Indian automotive industry has grown by leaps and bounds on the recent past, but a lot remains to be done, and new challenges in the face of depreciating dollar value, escalating commodity prices and cheap imports are emerging. In such a competitive and dynamic scenario, the automotive industry has a long wish list to place before the Finance Minister prior to Budget 2008.

For one, the industry would like the proper implementation of the Government's ambitious Automotive Mission Plan 2006-2016 (AMP), which aims to make the country a global automotive hub, accounting for 10% of the GDP and creating 2.5 crore additional jobs by 2016. Dilip Chenoy, Director General, SIAM (Society of Indian Automobile Manufacturers), had earlier spoken to us at the Auto Expo about the AMP. (See: Auto Expo organizer speaks about India's bright automotive future)

In the industry's opinion, under the present conditions of dollar fluctuations and escalating prices, a minister-level task force would be best equipped to monitor the proper implementation of the AMP.

While manufacturing accounts for 50 per cent and 30 per cent of the total employment in other Asian economies like Malaysia and China respectively, for India it's a meagre 12 per cent. The automotive industry feels that the growth of the automotive sector can change this and generate millions of job opportunities as per the Government's stated objective.

However, the industry feels that domestic manufacturers, especially the SME s, need to be protected and hence, would not like import duties to be reduced further. At the same time, a lowering of taxes, especially duties, will be extremely welcome. Auto parks, akin to the IT parks of the previous decade, with tax breaks for the members, have also been proposed to give a fillip to exports.