Higher fuel price holds back recovery in auto parts industry

  • Arjun Sharma, Hindustan Times, Ludhiana
  • Updated: Jun 06, 2014 19:03 IST

With the continuous ban on mining in the country and hike in fuel price every month, the auto parts industry is not showing any signs of recovery.

A large number of auto parts manufacturer are located in Ludhiana as a result, the industry here is facing the heat of the recession.

The industry here was expecting that after the change of guard at the Centre, there would be some rise in demand of automobiles, but so far, there are no signs of recovery.

Avtar Singh, president, Chamber of Industrial and Commercial Undertakings (CICU), said, “There seems no sign of recovery in the automobiles industry even after the for mation of the new gover nment at the Centre. The sale is going down sharply and it has been a tough time for the entire auto industry for the last one year.”

He added the major key factors affecting the sale were increasing fuel price and the high rate of interest on loans.

“There are no hopes that the rate of interest will be reduced. The ongoing policy of making regular hikes in diesel prices from 40 to 50 paisa a month will adversely affect the industry,” said Singh.

Industrialists say that the guidelines issued by major auto companies that the auto-component manufacturers should set up their units within the radius of 100km from these companies has given a major blow to these manufacturers in Ludhiana.

Ludhiana auto parts industry provides equipment, mostly metal parts, to all major auto companies including Mercedes Benz, Audi, Maruti, Tata, Nissan, among others.

As per the official records, the total turnover of the industry at present is ` 7,000 crore a year that has witnessed a decline of 20% during the past 3-4 years.

Industrialists rue that the global slowdown has severely hit their business and as a result of which, many of them have also shifted their units to Gurgaon, Pune and to places where auto companies have set up their plants.

Upkar Singh Ahuja, chairman, Automotive Component Manufacturers Association of India, said that the Union government should take some measures including introducing of a clear mining policy, streamlining the mining projects, no price hike in fuel for a year and reduction of rates on automobiles.

He also said that excise duty on auto parts should also be reduced from 12.36% to 8%.

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