Wednesday, July 13, 2011
By Pranjal Gera
Two New Automobile Hubs to come up in India
The Government of India is planning to set up two new automobile manufacturing hubs. The manufacturing hubs are likely to come up in the eastern and central regions and will spread across 10 thousand acres each.
In addition to the already existing zones in Maharashtra, Haryana and Tamil Nadu, the two new manufacturing hubs will help increasing India's position as the key manufacturing location of low cost vehicles. India's automobile industry at present has an annual turnover of US $ 75 billion and accounts for 6 per cent of the GDP. Praful Patel, Minister for Heavy Industries and Public Entriprises, in talks with the top officials of the auto companies in India said that if India wants to become a top manufacturer of low cost vehicles globally, it would have to emerge as a large-scale manufacturing destination and cost competitive market. He added that India needs to keep its costs down and maintain high level of efficiency in order to maintain its position as the leader in manufacturing of small cars. He further added that the two new hubs should be developed as self sustaining units. In a bid to resolve the issues like high taxation and export incentive schemes like DEPB (Duty Entitlement Passbook) scheme, he announced the formation of an inter-ministerial task force. Indian automobile industry currently has a turn over of US $ 75 Billions and exports of another US $ 11 Billions. With such a large amount coming from the exports, there is a constant demand from the industry for flexible tax laws and labour law reforms to increase competitiveness. The Indian Auto market is currently ranked seventh in the world. SIAM or Society of Indian Automobile Manufactures earlier demanded a right to lay off the excess work force at the times of slowdown.
Pawan Goenka, President of SIAM said that the agenda of labour reforms is high on their list, as currently there is no policy that allows them to lay off workers at the time of slowdown but with proper layoff benefits. He added that the auto companies should be allowed to put in more permanent workers. This kind of model exists in USA, where firms can lay off workers at the time of slowdown. He also pointed towards the safety net features like government funds that the automobile companies in USA enjoy.