Indian auto industry to miss AMP $145 billion target for 2016

The domestic Indian automobile industry is most likely to miss the target set 10 years ago in the Automotive Mission Plan 2016 (AMP). It will fall short by as much as 20-25 percent, mainly due to the economic slowdown over the past three years that resulted in subdued market sentiments and in turn sluggish demand for vehicle sales.

In 2006, the auto industry had set an ambitious target under the AMP 2016 to take its annual turnover to $ 145 billion (Rs with special emphasis on export of small cars, MUVs, two- and three-wheelers and auto components.

The review was conducted by SIAM’s knowledge partner ICRA Management Consulting Services (IMaCS) in association with SIAM and ACMA.

The AMP 2016 review has attributed sluggish macro-economic factors during the last 3 years to the significant slowdown terming it as one of the worst that the Indian automotive industry has  witnessed. “This has impacted the pace of growth resulting in underachievement of some targets envisaged in AMP 2016 while a few more are on course to be achieved by end of 2016.”

The review has, however, projected that the estimated shortfall of the AMP 2016 can be reduced to around 13 to 17 percent if the government supports demand through a few interventions like continuation of the current excise duty rates for cars, two-wheelers, CVs and lowering of excise duty on key components; introduction of accelerated depreciation scheme, quick rollout of the next phase of JNNURM, implementation of fleet modernisation scheme, ban on overloading and strict enforcement of the same, facilitation of affordable vehicle finance and support for export of automobiles through dedicated export promotion schemes. 

Other areas on which the industry and government should focus are on new and alternative vehicle technologies, setting up a technology acquisition fund for acquiring the latest technologies and making it available to industry for commercial purposes, regulations pertaining to automotive aftermarket to bring in minimum quality and qualification criteria for repair, service and spare parts, regulatory framework for setting up of independent garages and repair establishments as well as a scheme for technology and R&D focused on increasing fuel efficiency, reducing emissions and improving vehicle safety.

Considering the review, the government has started working on the next phase of the AMP 2016-26 to address the unfinished agenda of the AMP 2016 and target new initiatives keeping in mind the current and expected market dynamics. This will enable industry to plan and realise the future potential thereby contributing more to the Indian economy.