The upsurge in the demand in the auto industry has led to longer waiting periods and constraints in component supply. Increasing fuel prices, hike in interest rates or inflationary tendencies have done little to keep a check on auto industry growth in India. This year's budget is just the right time to benefit from such a growth.
Investors need the assurance that making up for the shortages in supply would help in this growth phenomena and not act against them by witnessing recession that hit a couple of years ago. Some of the factors that could go against the growing demand is the rise in car prices due to hike in raw material costs and fuel prices along with related increase in commodities prices which would directly impact on the disposable income. Government now needs to ensure these inflationary trends are curbed to make room for holistic economic growth.
In the auto industry, to be precise, incentives for use of eco-friendly and fuel efficient cars, incentives to develop such cars and subsidy in duties paid for energy efficient CBUs import should be given by the Government. Due attention on the commercial vehicle segment should be given wherein considerable investment is made by companies. Easy loans, accelerated depreciation and concessional duties can lead to more money flowing in making this sector investment attractive.
