Continue stimulus for auto sector: Vilasrao to FM

Ahead of the Budget, the Heavy Industries Ministry today pitched in for the auto industry asking Finance Minister Pranab Mukherjee to continue with the stimulus package provided to the sector during the slowdown.

"For auto industry we requested that the stimulus for the sector should be continued (for some more time)," Heavy Industries Minister Vilasrao Deshmukh told reporters here.

At the peak of the slowdown in December 2008, the government had announced a 4 per cent across-the-board cut in CENVAT that helped in reducing prices and spurred demand.

Besides, the states were also encouraged to buy more buses for urban transport under the JNNURM to give a fillip to the battered commercial vehicles segment.

Since then the auto industry has picked up steadily to post record sales in January this year.

According to the Society of Indian Automobile Manufacturers (SIAM), total vehicle sales at 11,14,157 units in January was the highest ever in a month in the country.

Car sales clocked a record high of 1,45,905 units. It was the 10th straight month of growth for the segment.

Industry players have, however, demanded that the stimulus package should be continued in the Budget as the industry is not yet out of the woods.

"The government should be careful in withdrawing stimulus package. It should not withdraw and if at all withdraw, then it should be gradual and not a sharp withdrawal," Tata Motors Vice-Chairman Ravi Kant had said yesterday.