India's
automobile industry is set to miss the ambitious targets set in the Automotive
Mission Plan for 2006-16 by a significant margin on account of slowing global
demand and a sluggish domestic market. The government and industry are working
on more realistic targets for the next 10 years, which will become a part of
the Narendra Modi government's 'Make in India' initiative.
The AMP, announced in 2006, sought to make India
an international hub for designing and manufacturing of automobiles and auto components.
According
to initial industry estimates, the Indian automotive market may have touched a
valuation of about $100 billion at the end of FY15. The target was set at $145
billion for March 31, 2016, the end of the AMP period.
While
the Indian automotive industry grew steadily in the first few years of the
plan, the persistent economic slowdown of the past four years took a toll,
shrinking both the passenger and commercial vehicles markets. Industry
executives said the sluggish global market added to the woes. According to the
initial estimates, the Indian auto industry is likely to have missed other
indicators by up to 25% of the targets. It
would have also failed to reach the targeted 10% of the country's gross
domestic product, hovering at about 7% at the end of the just concluded
financial year.
SIAM deputy director General Sugato Sen said, the Society of
Indian Automobile Manufacturers and the government are now preparing more
realistic targets for the next 10 years. We are working on the second stage of
the AMP till 2026, after reviewing the current policy document. Unfortunately,
we have not been able to meet the demand estimates because of various economic
setbacks faced by the industry in terms of tepid demand in India and the
international markets. India was expected to become the fifth-largest car
market globally but the decline in sales for the past three years has kept it
in seventh position. Fewer cars were sold in the financial year ended March 31
than in FY13.
India, the largest exporter of small cars, also lost out in
the global markets. Its share of purchases in Europe, its largest export
market, shrank from 35% to 16% over the past decade. However, the
two-wheeler segment scaled new heights as India became the second-largest
manufacturer producer of motorcycles globally. India clocked fifth position in
the commercial vehicle market globally as 32 consecutive months of declining
local sales failed to achieve targets. Sales of commercial vehicles in domestic
market were about 6 lakh units in FY15, from a peak of 8.09 lakh units.
The second leg of the AMP for 2016-26 is
expected to be finalised and released by end of this year. Government officials
say the new targets would be more realistic, taking into account the domestic
and global scenario and acknowledging the shortcomings plaguing the Indian auto
industry. We would try to find out the focus areas where India can excel. It
could be alternative vehicles, incentives for new R&D, safer and more
fuel-efficient vehicles that are expected to fuel demand in the global markets,
a senior government official said.
According
to an auto industry executive, the new AMP should be able to reinforce India's
prowess in manufacturing.
The automotive ma in the world and largest
doubles in a cycle of six years for every segment in a normal cycle. But we
have faced unprecedented slowdown in the past few years that affected growth,
hitting the expansion cycle. With the expected recovery in the economy, we
could ideally double our car market to 5 million units by 2020, said an
industry veteran preferring not to be identified.
source: economictimes.indiatimes
source: economictimes.indiatimes
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