NEW DELHI: One of India’s largest auto component makers, Uno Minda, says various regulations brought up by the government needs to be implemented in a staggering manner as it impacts consumers’ affordability, which in turn impacts sales volume.
The company is hopeful two-wheeler (2W) sales will pickup as per capita vehicle ownership in India is very low as against developed nations. Nirmal K Minda, Chairman & managing director and Amit Jain, chief technology officer of Uno Minda, in an exclusive interview with this newspaper spoke about 2W sales and its impact on business and the upcoming Budget.
Edited excerpts…
In ICE (internal combustion engine) segment, how are thing panning out for you given 2W sales have taken a big hit? Are you on track meeting the Rs 15,000 crore revenue target for FY23?
Minda: 73% of revenue comes from 2Ws and PVs where split is 50:50. Few year back, share of 2Ws was more. Then 17% comes from exports and 10% from aftermarket. The 2W business has taken a hit as total production came down from 22 million units in FY18-19 to 18 million now. To minimise the impact, we added new products so our kit value increased. Low volume has impacted us. We had budgeted Q3-Q4FY23 with good revenue numbers. In terms of revenue, we will be able to achieve the target or be about Rs 15,000 crore figure.
Do you think 2W wheeler demand will pick up in near future?
Minda: Affordability is a big issue. In EV space, people are waiting for prices to come down to 60-70K as not many can spend Rs 1 lakh. I believe 2W volume will rise given per capita vehicle ownership in India is far lower than developed nations. However, for this to come, it is important that our GDP grows, economy becomes $5 trillion in size soon and per capita income grows. There are many regulations like new OBD and new Cafe norms. This will increase cost as many parts are still not here, meaning more imports. All the regulations, be it six airbags or removal of Fame-2 incentives, should be done in staggering manner.
Union Budget is around the corner. Any particular demand here to uplift the sector?
Minda: Government has taken many good initiatives in last few years. Production Linked Incentive scheme for auto component industry is one among them. But there are few suggestions that can further drive auto component industry ahead. First, improving GST structure by bringing components tax structure at standard 18% to avoid dispute and ambiguities. Secondly, there is a need to incentivise R&D in the sector by providing tax benefits.