The second stimulus package announced in January has started to fructify, at least for a part of the automobile industry.
The urban development ministry last Friday approved detailed project reports (DPR) for procurement of buses under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for 17 cities across the country. This would result in sale of 5,155 buses worth approximately Rs 1,400 crore. The DPRs have been prepared by Urban Mass Transit Company Ltd.
Under the stimulus package announced on January 2, the government had decided to provide a one-time assistance to states under the JNNURM scheme, for purchase of buses for their urban transport systems. The states will now start the tendering process for purchasing the buses. Companies like Tata Motors, Ashok Leyland, Eicher Motors and Volvo buses will benefit.
"This will give a big boost to the commercial vehicle sector. We have been stressing on the need to implement the provisions of the stimulus package and I am glad that it has started to happen," said Dilip Chenoy, Director General, Society of Indian Automobile Manufacturers.
The buses would have to be purchased before June and 20 per cent of them would have to be low floor buses.
The commercial vehicle segment has been the worst affected by the demand slowdown with sales falling by 20 per cent between April and January 2009. After a robust growth of 35 per cent in 2007-08, bus sales have tapered off with a decline of 10 per cent in April-January 2008-09. On an average 2,500 buses are sold every month.
"With another 45 cities to go, it is difficult to say how many buses will be bought in totality. On a conservative basis, this will help in generating business of almost Rs 4,000 crore for the automobile sector and help revive the industry," an official in the urban development ministry said.
The DPRs of another ten cities including Kolkata, Pune, Chandigarh, Panaji, Bhubaneshwar and Surat are likely to be approved this Friday. JNNURM covers 63 cities in all.