Stimulus unlikely to revive demand, say automakers

Auto component makers said they are unlikely to gain much despite the avowed policy support to MSMEs as most of the money will be routed through banks.

Automakers in India face an uncertain road to recovery with industry executives saying that the government’s stimulus measures are unlikely to revive demand at a time when the lockdown imposed after the coronavirus outbreak has crimped sales of big-ticket items such as passenger vehicles.

Automakers have been urging the Centre to come up with measures such as direct cash transfers, reduction in GST and incentive-based scrappage policy. (Reuters file photo)

Auto component makers said they are unlikely to gain much despite the avowed policy support to MSMEs as most of the money will be routed through banks. Most firms are unlikely to seek loans for expenses such as employee salaries and to invest in new capacities in the current environment when they are struggling to utilize their existing capacities because of a lack of demand. In the absence of a direct cash transfer, high fixed costs are also weighing on industry players, they said.

“There is no demand stimulus. We will have to wait and see how the economy grows. Demand will be the biggest issue,” said Vikram Kirloslar, vice-chairman, Toyota Kirloskar Motor.

Automakers have been urging the Centre to come up with measures such as direct cash transfers, reduction in GST and incentive-based scrappage policy.