Home >auto >Auto industry urges govt to draw up stable long-term policy

New Delhi: The Society of Indian Automobile Manufacturers (Siam) and other industry executives are urging the central government to form a more stable and unified long-term regulatory policy for the industry to enable it to grow to its potential.

“(The) auto (industry) is the largest contributor to jobs and the economy; it has the potential to do much more if our policy allows it to grow," said Abhay Firodia, president, Siam, and chairman of Pune-based Force Motors Ltd, at the industry body’s annual convention on Thursday.

Firodia called for a stable policy environment to spawn a 10-year roadmap which would provide more sustainability and growth avenues to the sector, “as vehicles are no more luxury goods and are important for nation-building". It would also be a “big boost" to Prime Minister Narendra Modi’s ‘Make in India’ mission, he added.

The importance of India’s automobile industry cannot be disputed, as over the next ten years, it is estimated it will contribute over 12% of the country’s gross domestic product (GDP) and make up about 40% of the manufacturing sector, according to the government’s Automotive Mission Plan (AMP) 2016-26, released in September 2015.

Terming the auto industry the “mother of the manufacturing sector in an economy", the AMP said the sector’s rapid growth would provide a strong fillip to micro, small and medium industries across sectors, in addition to other manufacturing and service sector industries.

In terms of employment, the auto industry is poised to create about 65 million direct and indirect jobs over the next decade, as compared to over 25 million jobs created in the previous decade, the AMP said.

“An incompatible and contradictory regulatory environment could shy away investments from the country", Firoda said, highlighting that regulations have been changed on an ad-hoc basis, often without consulting the industry. One of the most significant ad hoc changes in policy made by this government was moving up the implementation of Bharat Stage-VI emission norms by two years to 2020 in January 2016.

To comply with this shift, the Indian automobile industry would spend over 1 lakh crore in a record time of three-and-a-half years, Firodia said.

Other industry executives also highlighted the need for a long-term regulatory and policy roadmap for India’s auto sector.

“There is still a case of multiple people speaking in multiple voices," said Gurpratap Boparai, managing director at Skoda Auto India Pvt. Ltd, adding that there is greater overall clarity on the direction the government wants to take.

However, Boparai called for stability on decisions regarding customs duties since such frequent changes “overnight upset investment decisions made on the basis of existing policies".

Boparai and Firodia also addressed the need for moderation in taxation on vehicles as they are included in the highest slab of 28% under the goods and services tax (GST) regime, adding that current taxation is not “letting the industry grow to its full potential".

Union minister of heavy industries and public enterprises, Anant Geete, said the government would come out with the new policy “soon", adding that “every aspect" of it would be discussed with the industry.

“The new policy will be industry, consumer and environment-friendly. We are here ensure growth of the industry," Geete added.

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