Speaking at Mint’s Pivot or Perish webinar on Thursday, Rajeev Chaba, managing director at MG Motor India Pvt Ltd said that government will have to revive the automotive industry in order to revive it’s revenues.
He was referring to the size of the industry, which contributes to about 8% of the overall GDP and about half of the manufacturing GDP. The auto industry’s contribution to government’s GST collection is pegged at ₹15 lakh crore or about 15% of the total GST collections.
Chaba pointed that the decline in volume of vehicles sold in the domestic market will have a proportional bearing on the government’s revenues.
Chaba said that the government should formulate policies to encourage exports from India.
“Despite all the challenges, the export volumes have been growing from India. Most of the peers are exporting from India, why we not encourage that?" he questioned.
Suspending the approach of boosting sales via offering discounts on vehicles, he said that the automakers in India are competing to make world-class products with all the latest mandates (safety, emissions etc) but selling them at a third-world price.
He said MG Motor resumed operations at it’s Halol plant 9 days ago but the supply chain problems persist.
“So we can’t start producing cars at full capacity. We are still finding it very difficult to open all our dealerships," he said.
“We are operating at 20-25% capacity and may be at 30% of our productivity. So the operational cost is a huge issue. I think in the next 3-4 months we need to think of a way to start operating (efficiently)," Chaba added.
To boost the demand, he said that the government should introduce an industry friendly vehicle scrappage policy.
“A good scrappage policy could combine the benefits of customer incentives, stimulus to the industry as well as takes care of the environment. It is a great opportunity to create demand by taking off the end of lifecycle products from the road," Chaba said.