60TH SIAM ANNUAL CONVENTION
Commercial Vehicle|November 2020
The 60th SIAM annual Convention against the backdrop of Covid made for some very interesting insights.
Deepti Thore and Deven Lad

Accounting for almost 7.1 per cent of India’s GDP and providing direct and indirect employment to about 37 million people, the Indian auto industry has been battling some unprecedented challenges for some time now. Witnessing the steepest ever decline in the first quarter (April – June 2020) of the current financial year with vehicle sales plummeting by over 75 per cent as compared to the corresponding period last year, the industry has seen a good escalation in its working capital needs in order to address regulatory as well as market requirements. More regulations are on the way and also the market requirements are shifting rapidly.

Amid such developments, the 60th Annual SIAM held at Delhi recently (under the theme, ‘Re-building the Nation, Responsibly’) saw Rajan Wadhera, Past President, SIAM & Senior Advisor, Mahindra & Mahindra, announce in his inaugural speech the need for regulations and how they would help to catch up with the rest of the world in terms of specifications and vehicle standards. “There is however a need for the government to intervene and resolve the problems faced by the automotive manufacturers,” he said. Opining that it was necessary to strengthen the auto industry so that it is capable of investing further into the upcoming safety regulations, Wadhera expressed that Indian auto industry is reeling under pressure because of the Covid pandemic.

THE RETURN ON INVESTMENT

Stating that the depreciation on investments had been huge, Wadhera averred that commensurate revenues have not been realised by the industry due to the lack of consumer demand. He remarked, “There is a need to push the Indian automobile industry to greater heights and adopt required measures for demand revival in the light of the recent pandemic.” Speaking against the background of the implementation of BSVI emission norms in April 2020 and the developments that followed, Wadhera touched upon the challenges faced by automakers, dealers and the suppliers since the slowdown in 2019 and during the during the April and June lockdown.

Pointing at the auto industry’s 49 per cent contributing to the manufacturing GDP and a turnover of USD 120 billion in FY2018-19, Wadhera mentioned that this is perhaps the most versatile and an all-inclusive industry. Drawing attention to the 15 per cent contribution of the Indian auto industry to the country’s GST revenue kitty of Rs.1,50,000 crores per annum, Wadhera said that it is the fifth largest in the world and exports products to 190 countries. Informing that the Indian auto industry generates export revenue worth USD 27 billion, Wadhera in his speech said that it has achieved a successful transition to BSVI. Opining that the industry has displayed immense resilience, Wadhera said that the government has helped the industry for it to get back on its feet. “It took a lot of efforts to re-start operations,” he added.

DECLINE IN THE CV INDUSTRY

Informing that the government helped the Indian auto industry to airlift components from China; to get the trucks to ply for essential and non-essential goods; to reduce the repo rates, to extend the moratorium for loan repayment, and to begin operations in multiple shifts including the night shift, Wadhera said that stakeholders across the value chain need to work together to ensure that growth returns to the Indian auto industry. Stating that it was essential to revive demand, to engineer a long-term regulatory roadmap, to develop infrastructure, and work towards an all-inclusive ‘Atmanirbhar Bharat’ mission, he mentioned that the commercial vehicle industry has faced its second longest slowdown in the last 15 years due to the rise in the cost of ownership and the introduction of the axle load norms. He also expressed the need to revive consumer demand.

Drawing attention to challenges like job uncertainty, income losses and a huge drop in consumer sentiment, Wadhera explained that things started going downhill from FY2019-20. A drop of about 18 per cent was witnessed in FY2019-20, he added. Stating that some CV segments witnessed a sharp decline of up to 45 per cent, Wadhera said the CV industry was in particular affected by liquidity crunch and regulations from various quarters. Proposing specific recommendations like reduction in GST from 28 per cent to 18 per cent for all vehicle categories, Wadhera said that the reduction in taxes would significantly help in uplifting the demand for automobiles.

REVIVING DEMAND

Drawing attention to the government’s move to develop a champion export scheme which would benefit companies having an export potential at one end, and provide India to become an attractive sourcing destination for the world at the other, Wadhera averred that attention needs to be given to minimise the cost disadvantage on logistics. To support Brand India, the government, he added, is also encouraging activities to strengthen the Indian auto sector and export good number of vehicles. He pointed at SIAM’s suggestion to engineer an incentive-based vehicle capex, and to fund allocation for STUs plying diesel and CNG buses similar to electric buses under the FAME II scheme. Speaking about the need for the auto sector and the government to work closely, Wadhera expressed that the auto industry is finding it tough to comply with regulations coming up in the face of a demand deficit. To revive auto demand, it will take a lot of doing and undoing on the policy front as well, he added.

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