The Indian automotive sector needs policy assistance

Joginder Singh, president and MD, Ford India, on protecting India’s growth potential
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First Published: Wed, Feb 06 2013. 10 25 PM IST
Joginder Singh, president and MD, Ford India. Photo: The Hindu
Joginder Singh, president and MD, Ford India. Photo: The Hindu
Updated: Wed, Feb 06 2013. 10 35 PM IST
Five things the government should look at in order to kick-start growth:
India is one of the fastest growing economies in the world, and the automotive industry is a key contributor to this growth. Experts project that India will become one of the top three automobile markets globally by the end of this decade, and we firmly believe the country has the true potential of a growth leader.
Key requirements for protecting this growth potential are continuity of policy reforms, reduction in inflation, lower interest rates and control of the fiscal deficit. Such policy measures will improve consumer confidence, increase the optimism of the manufacturing sector and ensure accelerated growth. The Indian automotive sector needs policy assistance for domestic demand as well as export opportunities. It is vitally important to speed-up free-trade agreement (FTA) negotiations (India-EU, India-Asean/Thailand, India-South Africa/Brazil), specifically including a broad range of automotive items in the FTA list. FTAs should be comprehensive, and offer fair and reasonable opportunities to all parties.
As a long-term committed partner in India’s growth, we expect the government to begin implementation of the goods and services tax and direct taxes code with practical timelines. The government should look into excise duty and other levies, with an objective of reducing and rationalizing taxes and levies on large vehicles—this will help industrial growth, and attract modern technology and innovation. In addition, the announcement and implementation of a vehicle scrap policy and incentives towards this are long overdue.
The government must address deregulating of diesel fuel to help eliminate uncertainties in the Indian automotive market. Despite the hike in the price of diesel fuel some time ago, there continues to be a big differential between the price of diesel and petrol. We suggest the government needs a more robust approach to solve the issue of diesel fuel pricing that provides a long-term solution to enable long-term investment in growth, rather than react to short-term cyclical market changes.
The government must renew its focus on strengthening infrastructure, including roads, bridges, port modernization and construction. In addition, the government should identify new avenues of infrastructure creation, and support these initiatives with land acquisition. Such a pro-active policy stance would facilitate industrial growth, encourage business and trade, as well as provide development opportunities for the general population.
We are very hopeful that the recently launched direct cash transfer pilot will be successful. We would encourage the launch of additional pilots across the country, covering various government subsidies and support systems to help the general population.
With a strong focus on investment and growth, the government should consider continuing the regulatory and fiscal concessions for the special economic zones. This would be a significant contributor to growth.
In the context of environmental standards, the government should take a holistic view when framing laws on pollution. We believe innovations in automotive technology and “green” vehicles based on leading-edge engineering applications will meet future environmental needs. The government should incentivize investments in these technologies and support consumers who wish to purchase such products.
While the government focuses on such growth-friendly policies, you can be assured that Ford Motor Co. will go further in bringing innovative products to the India market with leading-edge quality, green, safe, and smart attributes that Indian consumers want and value.
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First Published: Wed, Feb 06 2013. 10 25 PM IST
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