Praful for desi players to drive auto investment

NEW DELHI: The Government would like to see a sizeable share  of the Rs 2,50,000 crore potential investment in India’s auto industry to be generated from within, by India’s own companies, to tackle the challenge and opportunity presented by the huge and growing demand for cars in the country, Minister of Heavy Industry Praful Patel said after meeting the CEOs of automotive industry here on Monday.

“Today, a bulk of the domestic demand for automobiles is being met from facilities in the country. I would like to see a bigger chunk of investment to come from our industry,” Patel said.

The Minister was responding to a query by Express on the foreign investment expected in the auto sector.

“Yes there is slowdown, but there are no alarm bells ringing. Growth remains heathy. Cheaper imports cannot be a way out to bolster manufacturing,” he said.

He also said that the projected size of the Indian passenger vehicle segment is close to 9 million units and that of 2 wheeler is 30 million units – by 2020.    

In 2010-11, the total turnover and export of the automotive industry in India reached a new pinnacle of $73 billion and $11 billion respectively, with the cumulative announced investments reaching $30 billion.  

Asked by Express about the prospects of India’s auto exports, Praful was emphatic that India would have to remain cost competitive if it wants to become an auto hub.

Patel identified rising input costs, paucity of power, labour trouble, lack of skilled manpower, and growing threat of cheap imports as the big issues laid before the ministry by automobile manufacturers. 

“We will create task forces with the industry to see how these can be tackled,” Patel said.

Patel assured the industry that as a key player in creating an enabling and conducive environment for the industry, the Government would  follow a two pronged strategy.

The first is aimed at bridging the existing wide infrastructure gap in the domain of automotive testing and homologation through the Department’s flagship National Automotive Testing and R&D Infrastructure Project(NATRiP), which is being implemented at a cost Rs 2,288 crore and  is expected to be completed by the end of 2012.

The second part of the strategy is aimed at leveraging the investments being made in NATRiP facilities for collaborative R&D with the industry, especially for the small and medium enterprises in the auto component space.

To achieve this, the Ministry  is in the process of setting up an enabling mechanism in the shape of the National Automotive Board (NAB) which will be a permanent, professional, expert body for the automotive sector.