There is case for stimulus for automobile industry: Patel
New Delhi: Terming the slowdown in auto sales as 'challenging', Minister of Heavy Industries and Public Enterprises Praful Patel on Wednesday said he will take a delegation of the automobile industry to Prime Minister Manmohan Singh and Finance Minister P Chidambaram to discuss the possibility of a stimulus for the sector.
"There is genuinely a case for stimulus for the auto sector", Patel said adding auto sales have dropped in the recent months.
"I am in constant touch with the government... Also in the days, I am going to arrange a meeting of the entire auto sector - Society of Indian Automobile Manufacturers (SIAM) and other stakeholders - with the the Prime Minister and the Finance Minister so that the industry is able to express its concerns and I am sure we will find a way forward," he said.
This slowdown also leads to loss of jobs rather than creating jobs, he added.
He was talking to reporters on the sidelines of the annual convention of SIAM.
Besides slowdown in the economy, high interest rates have always been a cause of concern for our country and specially for the middle-class when they are buying white goods and cars as the EMIs are linked ultimately to the rates, Patel said.
"Therefore higher interest rates certainly in a slowing economy makes a case for a relook at it," he added.
The Heavy Industry Ministry has already taken up the issue with Finance Ministry.
Car makers Maruti Suzuki, Honda and Hyundai posted increase in their domestic sales in August, while others including Mahindra, Toyota and Tata Motors reported declines amid a continuous slowdown in the market.
While the car makers struggled, two-wheeler makers such as Hero MotoCorp and Honda Motorcycle and Scooter India reported sales growth in August this year.
According to SIAM data, car sales in the country, however, fell for record nine month in a row in July, declining 7.4 percent, as the economic slowdown and low consumer sentiment hit demand. Vehicle sales across all categories dropped 2.08 percent to 14,15,102 units in July 2013 from 14,45,112 units a year earlier.
It has prompted the SIAM to seek a stimulus package for the automobile sector from the government.
SIAM is looking at a package similar to one given during the 2008-09 downturn, in which excise duty on two-wheelers, small cars and commercial vehicles was reduced to 8 percent.
The automobile industry is one of the largest employers and contributes almost 25 percent of manufacturing GDP.