NEW DELHI: States should help in promoting manufacturing industry to achieve the Centre’s aim to reach $5 trillion economy in the next five years, Maruti Suzuki India (MSIL) chairman RC Bhargava said on Tuesday.
“It is now time for state governments to become partners in making the manufacturing industry grow and recognise the importance of its role in the overall automobile industry,” Bhargava said at the company’s 38th annual general meeting in New Delhi.
According to Bhargava, there is a need to do more if the target of manufacturing sector contributing 25 per cent of the total gross domestic product (GDP) by 2022 is to be achieved. “This would also be an important step towards the goal of a $5 trillion economy,” he said. The automobile sector accounts for 49 per cent of India’s manufacturing GDP.
Highlighting state governments’ role, the MSIL chairman said they have much more to do with the cost of operating the industry. Citing taxation example, Bhargava said that petrol tax is much higher and the affordability of a car is very much determined by state governments.
He further said that ability of customers to buy new vehicles were affected in nine states where road taxes were increased. The auto sales in India has declined for the ninth straight month in the month of July due to host of factors.
Maruti Suzuki, which sells one in every two cars sold in the country, registered 36 per cent decline in sales in the month of July. The slump has forced many auto-makers to temporarily halt production and lay off workers, mainly the contractual labourers.
Maruti Suzuki admitted that it has not renewed the contracts of around 3,000 temporary employees, as they battled rising inventory.
On the future outlook, Bhargava said they are near the bottom of the downward cycle and the economy and car sales should start to accelerate in near future.“The fiscal 2021 should again see Maruti Suzuki coming back to its usual rate of growth,” he further added.