Auto industry is not able to invest in future CAFE and RDE norms: SIAM President

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The auto industry association SIAM said on Friday that producers were not in a position to further invest in enforcing upcoming government regulations as the sector was going through an incredibly challenging time.

Society of Indian Auto Manufacturers (SIAM) also acknowledged the need for government assistance in achieving the goals set out in the 2026 Automotive Task Plan (AMP 2026).

“Investments are very high for (implementation of) upcoming regulations and due to lack of market demand, the industry has not realized the commensurate revenues,” SIAM President Rajan Wadhera said while speaking at the annual convention of the industry body here.

As a result, the sector does not have the potential to further invest in the introduction of new legislation such as the Corporate Average Fuel Efficiency (CAFE) requirements from 2022, he said.

Wadhera also said there should be no excess in rules, as India’s pollution levels are now on par with the world’s most stringent.

In pursuit of government funding to provide any sort of demand boosters, Wadhera said: “We feel that whatever we talk about reviving demand would give customers the requisite drive to come to the dealerships.”

He acknowledged that stimulus to demand is a must for the industry in order to meet the goals set out in AMP 2026.

AMP 2026 is the joint vision of the Indian government and the automotive industry whereby the different divisions of the automobile and automobile part market need to be in scale and contribution to the Indian economy as a whole by 2026.

The strategy envisages bringing the gross domestic product ( GDP) of the automotive sector to 12 percent from the existing 7 percent as well as creating 6.5 crore new jobs from the 3.7 crore jobs currently in operation.

It also intends to increase vehicle production to 6.6 units of crore by 2026.

“We were almost on target (for the AMP 2026), but we’ve only crossed (volume of) 2.6 crore vehicles in the last two years… we strongly feel that if we want to stay on track on the schedule, market support is required,” Wadhera said.

For the industry, AMP 2026 is relevant as it will improve the sector’s size, and that, in turn, will introduce competition to make the vehicles cheaper, enabling exports to increase, he added.

Though acknowledging that the industry is behind the government in its initiative Make in India, Wadhera also pointed to the continued slowdown in the automotive sector.

Before the pandemic, he said, the domestic auto industry was already facing tremendous stress.

Demand had slowed due to numerous factors such as liquidity crisis, increased cost of ownership, and even implementation of axle load requirements for the category of heavy commercial vehicles, Wadhera said.

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