Indian Government plans to set up two automotive hubs in Central and East India

Indian government has its sights on Central and Eastern India to set up two of its automotive manufacturing hubs in about 10,000 acres of land which is an addition to three already existing zones in Haryana, Maharashtra and Tamilnadu. The aim is to consolidate India’s position as a significant milestone in low -cost automotive production that claims to have an overall turnover of about $73 billion which sums up to 6% of GDP.    

Praful Patel, the minister for Heavy Industries and Public Enterprises has informed the top officials of automobile and auto component companies that India has to emerge as a large scale manufacturing destination being cost competitive at the same time to be the leader in low cost automotive production globally. He has also hinted that India already being a pro in manufacturing small cars, needs to maintain its efficiency and concentrate on keeping the cost down to achieve the global acclaim. He added that the manufacturing hubs should emerge as self-sustaining blocks and an inter-ministerial task force has to be set up to resolve the issues related to the high taxation and export incentive schemes such as Duty Entitlement Passbook (DEPB) scheme. The task force is expected to drive representatives from the finance and commerce ministries.

Indian automotive industry which now stands as the world’s seventh ranking automotive industry is targeting a turnover of $143 billion by 2016, which is a huge leap from current $73 billion turnover. Another $11 billion to add to the turnover from the export of automotive components, a flexible tax structure and reforms has been drawn to maintain the competitiveness.    

The Society of Indian Automobile Manufacturers commonly known as SIAM, has expressed its desire to lay-off the excess workers in the industry, but providing them with adequate unemployment benefits as a compensation during the slowdown, to which Mr Pawan Goenka, the president of SIAM has responded saying that there is no policy on laying off of the excess employees during the slowdown, which is a common phenomenon seen in the industry and that the Labour reform is what takes the highest priority. He has also mentioned that, like in the U.S, Indian Automotive companies should also hire more permanent employees; allowing to fire them during the slowdown and support them with the government fund during the period of their un-employment.