Auto component manufactures appeal to government for relief

November 6th, 2008 - 9:51 pm ICT by IANS  

New Delhi, Nov 6 (IANS) Automotive Components Association of India (ACMA), the industry forum of automotive parts makers and ancillary units, has appealed to the government to provide a relief package in the form of a ‘bridge policy’ to help the sector cope with the current economic slowdown.”The association feels the need for an immediate redressal package comprising of a two-three year ‘bridge policy’ to enable the industry survive the current economic crises,” ACMA president J.S. Chopra said in a statement.

Waiving off of customs duty on raw materials, assured funding from banks on capital expenditure, increasing the time-period of repayment of existing loans of small and medium enterprises (SMEs), and further cutdown on the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) by the country’s central bank are some of the measures ACMA has suggested.

The proposal stated that the government should take immediate steps to shore up liquidity in the financial system and evolve special loan schemes for the auto component industry at concessional rate of interest.

“In the domestic market, the crippling liquidity crunch has slowed down vehicle demand, specially in the commercial vehicle industry. Payments from OEMs (original equipment manufacturers) to vendors are getting delayed, loans for capacity expansion are difficult to secure and even disbursement of loans already approved by the banks are being deferred,” Chopra said, explaining the industry’s position.

He also asked vehicle manufacturers to make special efforts to support component manufacturers and to avoid payment delays.

Chopra, however, maintained that he was confident about the industry’s long-term prospects.

“It is necessary to provide some immediate relief to the industry to sustain their growth over the next few months to ensure that the momentum built over the last five years is continued,” he said.

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