The Rs. 20 lakh crore economic package announced by Prime Minister Narendra Modi today has come as a silver lining to the auto industry at a time the entire industry has been dwindling due to operations and production being stopped. It accounts almost 10 per cent of the nation's GDP and other than directly benefiting auto component makers as over 80 per cent of them are Micro Small or Medium Enterprises (MSMEs), it will also include the farmers, working class, middle and lower middle class population and unorganised sectors. Therefore, it is expected to spur the demand in the economy and in-turn of automobiles, especially of two-wheelers, entry segment and B-Segment vehicles.
Commenting on the new economic package, Rajan Wadhera, President, SIAM, stated that, "The promise of Rs 20 lakh Crore comprehensive economic package announced by the Hon'ble Prime Minister, focusing on economic activities and an overall aim of a self reliant India, will provide the right boost to demand and growth of our economy once again. Indian Automotive industry is a strong pillar of Make in India with huge contributions to GDP and employment and relies on its highly indiginised supply chain. We are hopeful that a focussed package to support the Indian automotive industry would be announced by the Hon'ble Finance Minister, when she announces the details of the package."
Focus is also on increasing local manufacturing of automobiles.
Speaking in this regard, Vipin Sondhi, Managing Director & CEO, Ashok Leyland Limited said, "The address by our Honourable Prime Minister, has lifted spirits and created positive sentiments. It was inclusive, comprehensive and compelling. While we await the details , the announcement of reforms-cum-stimulus to the tune of 10 per cent of GDP ,amounting to Rs. 20 Lakh Crores has the potential to be sustainably beneficial to all sectors of the economy. Industry and in particular the CV industry will stand to gain as well as the economy starts to move again. The massive thrust on self-reliance, along with the focus on creating local demand, and resurrecting local supply chains should provide enough impetus to kick start the economy. All these measures are the need of the hour and frankly more than expected given the limited fiscal room that was available. With the pride of Make in India through quality, we look forward to a stronger, self-reliant India where everyone prospers."
PM Modi also spoke about promoting locally manufactured and assembled products in the country not only by increasing the usage but also by being more vocal in endorsing them. Not only this will encourage automakers to increase their localisation levels, but also will help component business to flourish. The whole supply chain in the auto industry has been disrupted after the nation was put under a lockdown and to get it in place and functioning is the need of the hour as automakers have resumed both production and sales operations. The package may go a long way in uplifting customer sentiments and in-turn the demand followed by a proper supply. It will help to keep the wheel rolling and get the entire ecosystem in place soon. Demand in the used car market too is likely to shoot post the lockdown as people now feel the need of personal vehicles after cab services were stopped during the lockdown. If the relief package leads to better liquidity and credit flow in the market, it is expected to push sales even in the used car market.
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