It is not everyday that the collective aspirations of a Rs 165,000-crore industry hinges on a set of four wheels. However, such seems to be the case for the automotive industry.
Tata Nano, the world’s least-expensive car, will now have to provide succour to the ailing domestic auto industry.
Ask Kaushik Gupta, an insurance agent in Allahabad, who insists on making the Nano his own even if he has to wait for another six months. “If not for the Nano I would have already be riding a bike,” Gupta says.
Gupta of course speaks for thousands waiting for the people’s car, and it is this class of new consumers who hold the key to the industry’s revival.
Things, however, were starkly different only a year back. A young growing economy and low interest rates ensured that the industry was on a fast-track. What followed was a period of intense expansions, gamut of new cars and bikes and double-digit growth of the sector.
Sensing a shift in global demand in the wake of rising crude oil prices post 2005, the government also got into action by reducing excise duties repeatedly. Duties on small cars came down to 8 per cent in 2008 from 32 per cent in 2003. For bigger cars, the excise duty stands at 20 per cent.
The aim was to make India a hub for small cars, something that seems to be happening. The global slowdown and liquidity squeeze however, rubbed off on the domestic front, as sales contracted for the first time in six years.
“There are many positives that this government has done for the industry, none of them bigger than the auto mission plan and formation of NATRIP,” said Dilip Chenoy, director general, Society for Indian Automobile Manufacturers.