Press "Enter" to skip to content

Business Headlines Auto Sector Slowdown Mr. Mahindras Message to the Govt.

pBusiness Headlines: Auto Sector Slowdown Mr.

Business Headlines Auto Sector Slowdown Mr. Mahindras Message to the Govt.

Mahindras Message to the Govt.p p hello you are watching the business headlines ohw news with me Ali Azhar a day after Narendra Modi was sworn in for his second term as Prime Minister the government allowed the release of a long delayed and controversial report which showed that unemployment was at a 45 year high the National Sample Survey office or the NSS owes jobs survey for 201718 had showed a massive spike and pegged joblessness levels at 6.1 percent for that period obviously the government claimed the report was unreliable and said that it was based on a new methodology and could not be compared with previous years also worth mentioning is that CMI a private data group whose data is considered more uptodate and credible than government data reported that Indias jobless rate rose to seven point five one percent in the month of july 2019 the point being that in todays testing times we live amid a highly uncertain economic environment in which job losses are a reality and no sector echoes that sentiment more than the ailing automobile sector at the risk of sounding like a broken record slumping sales of cars and motorcycles are triggering massive job cuts in the auto and auto ancillary industries with many companies resorting to shutting down factories for days and reducing their number of shifts in an attempt to save operating costs however the most worrisome statistic was that automakers part manufacturers and dealers have laid off about 3 lakh 50, 000 workers since April according to a report by international news agency Reuters to give you some perspective on the magnitude of the problem Indias automobile sector is not a small one so one cant just brush aside us woes and ignore the repercussions distress in this sector will have a contagion effect would spread to all corners of the economy just last week continuous partial shutdowns of a big factory owned by Tata Motors in Jamshedpur led to 30 steel factories closing their doors in the same region India has the worlds fourth largest automobile market the sector contributes 7.1 percent to the countrys GDP and 49 percent of Indias manufacturing output lets also keep in mind that it employs more than 35 million people directly and indirectly so when news surfaces that passenger vehicle sales have dropped for nine straight months through July with some automakers suffering youre on your declines of more than 30 percent in recent months its a big cause for concern lets understand what exactly is contributing to the slump in this sector first off our GDP growth is at a more than fiveyear loan so generally economic activity is not conducive the government claims we are in the midst of a cyclical slowdown and that things would pick up soon however we believe the slowdown is structural and not cyclical and would need policy intervention to reverse secondly amid a liquidity crunch and a general skepticism to lend to the troubled auto sector automakers morto ancillary makers dealers suppliers retailers and final consumers like me and you are finding credit much harder to come by from financials and in DFCS adding to the problem thirdly government policies have not been supportive to the industry a sudden shift from BS for two Bs six emission standards axle load capacity norms and a lacks vehicle scrappage policy have all led to massive buildup of inventories which manufacturers are unable to sell for Cle the government views automobiles as sin Goods and levies a twenty eight percent rate of GST on them not only that a blog the high levels of registration fees Rotax and cess contribute to making cars out of reach for many middleclass Indians I mean if you take a look at the price of cars in the US and Europe we paid double of what they pay over there and if you look at countries like UAE we pay almost triple the price in India the recent push for electronic vehicles or EVs and the reduction of GST rates from 12 to 5 on EVs is a step in the right direction however sales of EVs are so minuscule compared to other vehicles that a reduction in rates wont contribute to the industry as a whole and thats because India has no infrastructure in place such as charging stations service stations supply equipment etc to encourage demand for visas yet and is not expected to do so for the coming decade with that out of the way I would now like to bring your attention to two important developments that took place yesterday first off auto industry leaders met with Finance Minister Nirmala Sitharaman and sought immediate government intervention to arrest the near collapse of the auto sector and job losses that committed this was the first time that industry leaders met with policy makers after the formation of the new government eminent leaders such as RC Bhargav chairman of Maruti Suzuki Pawan moonshell chairman and MD of Hero MotoCorp besides heads of Mahindra and Mahindra Toyota Hyundai Motors Volkswagen and others were present from the government side the FM Arvind savant who is the Heavy Industries Minister and Amitabh Kant who is the CEO of nithya yoga were in attendance the automakers made a strong pitch for the reduction in GST rates from 28 to 18 higher depreciation benefits favorable policies relaxation of credit facilities and some sort of stimulus package they also reiterated that increase vehicle registration fees should not take place and stressed that the government should request banks and NBF cease to relax lending terms to the sector they warned of job losses and not only among vehicle manufacturers but also component makers suppliers dealers unorganized players garages equipment manufacturers and even tire makers the government took the suggestions of industry leaders into consideration and seemed genuinely concerned according to one source however the hourlong meeting did not yield any concrete proposals the other important development was that distinguished leader and chairman of Mahindra and Mahindra limited Anand Mahindra made his views public and called for a reduction in taxes among other things to breathe life back into the auto industry amid the vicious slowdown speaking and his company is 73rd annual general meeting in Mumbai mr. Mahindra advocated shortterm measures to catalyze consumption he said that the most obese and welcomed first aid would be some sort of temporary relief on GST either by modifying slabs or by removing cess another suggestion he had was for government to take a relook at the registration fees which have gone up substantially and a rollback of the increase in road tax mr. Mahindra conceded that he understands the governments hesitancy in implementing GST cuts as the centre has to live up to their fiscal targets however he said the auto industry contributes upwards of one lakh eighty thousand crore rupees to the government Treasury and the current slowdown poses a greater threat to the financial arithmetic he called the auto industry a living breathing ecosystem that has economic and social repercussions well beyond the number of vehicle sold he further went on to say that a revival of the industry would lead to revival of jobs and hence consume in a virtuous cycle that would get us closer to the five trillion dollar economy which is our common goal he remarked in addition he also touched upon the importance of availability of Finance and lauded the recent rate cut by the RBI and backed the government push four Vs well mr.

Mahindra was selected with his words and did not give much away other prominent leaders from India incorporated such as AM nyuk and Adi Godrich Momo local with their criticism with another leader from the automotive world mr. Rahul Bajaj of Bajaj Auto stating his displeasure at the situation when he said there is no demand no private investment so where will the growth come from it doesnt fall from the heavens thank you for watching HW news this is me signing off have a great team HW news for apostle avatar de peaje the vinod dois shown above mu J Android or iPhone but with the accept parent HW news car free app download country david Gidget download TG h w nu ska free app or most saturated p

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *