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Auto industry calls for continuation of stimulus in Budget

autos Updated: Feb 18, 2010 17:19 IST

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Stating that the auto industry is yet to come out of the woods despite clocking record breaking sales in January, vehicle makers have asked the government to continue the stimulus package provided during the economic downturn in the upcoming Budget.

The country's largest car maker Maruti Suzuki India (MSI) said policies that helped the auto industry grow at about 21 per cent in the last 12 months should be continued.

"It will be too early to exit from stimulus measures as those were the main reasons of growth for the industry. It is too early to say that the auto industry has fully recovered (from the slump due to global economic crisis)," MSI Executive Officer Marketing and Sales Mayank Pareekh said.

According to Society of Indian Automobile Manufacturers (SIAM), total vehicle sales of 11,14,157 units, in India in January was at the highest ever sold in a month. Car sales were also at record high of 1,45,905 units. It was the 10th straight month of growth by the segment.

The good numbers notwithstanding, Mahindra & Mahindra Vice-Chairman Anand Mahindra said the government should be very careful on any withdrawal of stimulus packages. "It was not a very overwhelmingly large one like in China or in the US. It is a very very measured package."

The government had cut CENVAT by 4 per cent in December 2008 that resulted price reduction of automobiles and helped in spurring demand. Besides, states were encouraged to buy more buses for urban transport that gave a fillip to the commercial vehicles segment.

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