This Article is From Sep 12, 2014

Automotive Mission Plan 2016 Targets to be Missed by up to 25%: Report

New Delhi:

The economic slowdown in the last three years that resulted in a demand slump will force the Indian auto industry to miss by up to 25 per cent of the targets set in ambitious Automotive Mission Plan (AMP) 2016.

The auto industry had set an ambitious target under the AMP 2006-2016 to take its annual turnover to $145 billion with special emphasis on export of small cars, MUVs, two and three wheelers and auto components.

"Based on the expected growth rate for the remaining period of AMP 2016, the overall performance of the industry will be short of the targets by around 20 to 25 per cent," according to the review of AMP 2006-2016.

The review was conducted by ACMA and SIAM's independent knowledge partner ICRA Management Consulting Services (IMaCS).

Explaining the reasons for falling short of targets, it said: "The sluggish macro-economic factors during the last three years have led to a significant slowdown, which is amongst the worst that the India automotive industry has witnessed."

This has impacted the pace and growth resulting in under-achievement of some of the targets envisaged in AMP 2016, while a few more are on course to be achieved by end of 2016.

"However, this shortfall can be reduced to around 13 to 17 per cent if the government supports demand through a few interventions," it added.

The review called for continuation of current excise duty rates for cars, two-wheelers, commercial vehicles and lowering of excise duty on key components. It also highlighted the importance of fleet modernisation scheme, quick roll out of

next phase of JNNURM, ban of overloading and strict enforcement of the same, to help achieve the AMP 2016 target.

The review further said the government must also facilitate affordable vehicle finance and provide support for exports of automobiles through dedicated promotion schemes.

As per the AMP 2006-2016 announced in 2006, a goal was set for India to become the "destination of choice in the world for the design and manufacture of automobiles and auto components with output reaching a level of $145 billion

accounting for more than 10 per cent of GDP and providing additional employment to 25 million people by 2016".

The review said already the government has already started working on the next phase of AMP 2016-26 so as to address the unfinished agenda and new target initiatives keeping in mind the current expected market dynamics.

"While the last decade was predominantly driven by domestic demand, going forward industry geared up to meet both domestic and global demand," it said.