Govt To Buy 10,000 Commercial Vehicles
The government has decided to place orders for over 10,000 commercial vehicles with domestic manufacturers to spur demand in this sector.
Under a package being worked out, the defence services will place orders for 5,000 commercial vehicles very soon. The government is also finalising a programme which will enable regional transport authorities and corporations to place orders for another 5,000 vehicles with the companies.
Finance minister Yashwant Sinha had reiterated a few weeks ago that the government would announce a slew of measures to boost demand in crucial industries like commercial vehicles and capital goods, which had seen a drastic fall in demand in the first quarter (April-June) of 1998-99.
A senior government official said: "We will push up demand in this sector by increasing government buying.
The defence services will order 5,000 commercial vehicles. We are also working out through regional transport agencies and corporations an order of another 5,000 vehicles."
The large order from the government is expected to improve the sales of commercial vehicle manufacturers, which have turned in a dismal performance in the current fiscal.
In the first quarter of 1998-99, sales of medium and heavy commercial vehicles dropped by 47 per cent to 13,447 from 25,447 in the corresponding period last year.
Sales of light commercial vehicles fell by 18 per cent to 12,272 from 14,881 in the corresponding period last year.
The key companies affected in the medium and heavy commercial vehicles sector are Telco, Ashok Leyland and Hindustan Motors.
In the light commercial vehicles sector, the key companies that have seen their sales falling include Ashok Leyland, Bajaj Tempo, Eicher Motors, Mahindra & Mahindra, Telco and Swaraj Mazda.
An order from various government departments for 10,000 vehicles would amount to 6 per cent of the total commercial vehicles sales in 1997-78 of 1.56 lakh units, and will be worth around Rs 650 crore.
The Association of Indian Automobile Manufacturers (AIAM) has been asking the finance ministry for concessions to revive demand in the commercial vehicles sector.
The measures suggested by the association include reduction of excise duty, easier availability of auto finance, special packages for state transport undertakings and fleet operators, and incentives for fleet renewal to maintain the average fleet age at seven years in the metropolitan cities and 12 years in state capitals and other important cities.