Budget 2014-15: Auto industry hoping for smooth ride

The automobile industry of India is hoping that their luck will change when the new government unveils its budget on July 10.

The auto industry is one of the main drivers of the country's economy, but as it slows and inflation expands, demand is seen to be slumping.

Rising fuel prices and dwindling incomes are some of the factors responsible for a slump in demand in the automobile industry.

Car sales had plummeted for 15 successive months before bouncing back into positive territory in May. In the following month, sales were up some 14 percent.

But the turnaround is mostly due to a short-term cut in car taxes.

And, if the recovery is going to continue, experts say the new government needs to launch a major overhaul of the auto industry. And they say the upcoming budget is the perfect time to do it.

"First expectation is import duty. Import duty is exorbitant in India, ranging from 160 to 170 per cent on imported cars. They have to come down - the import duty. And with regard to domestic cars, there has to be 'Uniform Excise Duty' on all cars," said Praveen Sahni, Executive Director, Galaxy Toyota.

But it's not just taxes. The industry is also hoping for a relaxation in the country's strict labor laws, which makes it hard to fire factory workers.

And then there are infamous infrastructure problems.

Nissan Motor India Pvt. Ltd's President and Managing Director, Mr. Yomura, said, "if a government can proceed with more investment in infrastructure, like highways, roads and those things. That will benefit everybody. We invest a lot to build big manufacturing plant in Chennai, and we have a production capacity of 400-thousand units per year. And also we built big technical, engineering centre, which employs 3000 engineers."

And with the auto industry slowly showing signs of recovery, automakers are hoping this week's budget reveal will help keep the momentum going. (ANI)

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