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Required: Remedial Measures

The anti-China sentiment prevailing now has given rise to considerable uncertainty in the automobile industry with the government wanting to restrict or even ban the import of components from the Land of the Dragon. The industry depends heavily on components imported from China and, as such, banning imports will have an adverse effect on the production of cars.

There are questions that both the industry and the government need to ponder and answer. Why is it cheaper to import from China than to procure locally? Why are international industries reluctant to come to India? The answer may be found in the uncertainty with regard to rules and regulations. Rules tend to change from Budget to Budget and a major policy overhaul takes place if there is a change in the ruling party. If I am not mistaken, when the liberalization took place in 1992, the road map envisaged bringing the import duty on cars down to 25 per cent. However, five years down the road, that did not happen; in fact, it went in the opposite direction. Such flip-flop and inconsistent policy-making has cost the country dearly. While most governments in the world have introduced some form of an economic package to boost the economy, here in India the government has increased the taxes on fuel, which, in turn, increases the prices of all the commodities because the cost of transport goes up.

Most of the manufacturers are banking on the forthcoming festive season and hoping that the demand would go up. The present job situation is grim as is the number of business enterprises shutting down. People have been losing their jobs and many of them have been forced to dig into their savings to survive. If the situation does not improve soon, we may find ourselves headed for a major crisis by the end of the year.

This month we drove the first EV from Mercedes and I was quite impressed by the SUV. On the performance front, it can match IC-engine SUVs. You may read our first drive report in this issue.


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