FADA President's Message January 2005 Looking Forward to a Fruitful 2005 Jayendra Kachalia, President 2004 is past us. The year witnessed the Indian economy performing reasonably well. The manufacturing sector and the automobile industry in particular ended on an upbeat mood. However, at the fag end of the year, the Tsunami wave spoiled the buoyant sentiment inasmuch as over one lakh fifty thousand lives in Indonesia, Thailand, Srilanka and India were washed away by the killer wave. In addition to loss of precious lives, there was a large-scale devastation of property and havoc wrought by the deadly wave. Loss of means of livelihood rendered many victims jobless. FADA and all automobile dealers nationwide express their solidarity and sympathise with the affected people who lost their near and dear ones and their homes and hearths arising out the tidal wave. It is good to see an overwhelming response to this colossal tragedy and a large number of people belonging to various strata of life coming to the aid of Tsunami victims. It is equally heartening to find that automobile dealers across the country have risen to the occasion and are contributing in their own humble way for reconstruction and rehabilitation work. FADA, as a body of automobile dealers, has pitched in with a token contribution for the assistance of Tsunami victims. During the year 2004, FADA had the misfortune of losing two stalwarts of automobile trade, namely, Mr Kamal Kasliwal of Kamal & Company group and Mr R Ramachandran of TVS group, who left us for heavenly abode. The retail automobile trade also witnessed the pains of loss of two young entrepreneurs in Mr Rajnish Poddar of Pathankot (Punjab) and Mr K D Bambha of Karnal/Panipat (Haryana). We, in FADA, convey our heartfelt condolences to the members of bereaved families and pray to the Almighty that the departed souls may rest in eternal peace. Coming back to the performance of economy in the year gone by, it is a matter of satisfaction that Indian economy, depressed by a poor monsoon and runaway inflation in the second half, made a surprise turnaround as 2004 closed with double digit industrial growth emboldening the government to push hard tax, subsidy and structural reforms in the year to achieve a higher growth of 7-8%. Exports at nearly 25% growth, foreign exchange reserves surging past $130 billion, the economy has never been so buoyant. The beast of inflation too has been tamed to less than 7% by late December with global crude oil prices moderating and seasonal factors tapering off. Performance of the automobile industry stood out, consistently clocking a double-digit growth. The fact that all segments of industry, viz., commercial vehicles, passenger cars, 2-wheelers, and 3-wheelers registered a hefty growth ranging from 11% to 31% is all the more comforting. Passenger vehicle sales at about 1.2 million crossed one-million mark and 2-wheeler sales clocking over 6 millions units were records of sorts. All trigger points for Indian automobile industry to scale new heights are present. Keeping in view the fact that the level of motorisation is still very low in the country, Indian automobile industry has a great growth potential. The industry is not resting on its laurels and is constantly exploring new vistas beyond country's frontiers as seen from the export performance and growing international presence in the recent past. In view of its far-reaching forward and backward linkages, Indian automobile industry has played a pivotal role in galvanizing other allied sectors, as well. Indian automobile industry is at a take off stage. It is now for the Government to play its role to ensure that impediments and irritants are removed to enable that the industry lives up to its true potential. One of the major hurdles in the growth path of Indian automobile industry is the multiplicity and the high level of taxes on motor vehicles. Passenger cars still have an element of high excise duty at 25%. In addition, there are plethora of taxes at the State and local levels in the forms of sales tax, entry tax, octroi, turnover tax, etc. High level of road tax on motor vehicles is another impediment. All these taxes lead to cascading effect thwarting growth. On the top of it, road and parking infrastructure, particularly in the cities and urban areas leave a lot to be desired. While there has been a conscious attempt at the central level towards rationalization of taxes, the States have much more to do in this direction. FADA has submitted a pre-budget memorandum to various authorities in the Central and State Governments highlighting major issues affecting the growth of automobile sector and giving its suggestions for removal of the bottlenecks. We feel that if these suggestions are accepted, there is no-reason why India cannot be a force to reckon in global market. Major recommendations contained in the memorandum are published elsewhere in this issue. I am glad to inform that FADA is organising its first Regional Convention of automobile dealers, namely, Western Region Auto Convention at Hotel Grand Hyatt, Mumbai on 26th February 2005. This event coincides with Mumbai Motor Show being organised during 25th - 28th February 2005 by the Times of India and supported by FADA & WIAA. The theme of Regional Convention is "Leveraging Relationships". Crème da la crème from the Government, industry, academia, management consultancy, insurance and banking sectors are expected to address and interact with the participants at the Regional Convention. In an environment of intense competition in the Indian automobile market, all stakeholders in automotive business need to forge partnerships and to leverage those relationships for the good. I would urge my fellow dealers and others engaged in the automobile business to participate at the Regional Convention in large numbers. The registration form and the programme of Regional Convention are published elsewhere in this issue, for your information and use. FADA had initiated B2B programme for exchange of excess/dead spare parts inventory among FADA members some time back. B2B site is ready and testing is being carried out. The site will become operational very soon. With complexities of operating and managing automobile dealerships growing by the day, FADA is working very fast on starting an exclusive Helpline Service within FADA Secretariat. Hopefully, it will help members contend with issues and problems connected with the working and operation of dealerships. The service will be in place very soon. Another area of interest to automobile dealers is impending introduction of High Security Registration Plates w.e.f 1st June 2005. Automobile dealers will naturally be interested in knowing about how the scheme of High Security Registration Plates is going to work and whether it will promote their business interests. Some of the queries of the members have been clarified by Mr Anil Chhikara, MLO, Transport Department, Government of Delhi elsewhere in this issue for the benefit of automobile dealers. FADA held its Council Meeting at Kolkata and Regional Meeting at Bhubaneswar recently. The meetings were quite successful in that the participants at these meetings had a very useful and enlightening interaction with Chairman¬-National Insurance Company; Commissioner of Commercial Tax - Government of West Bengal; Principal Secretary - ¬Environment Department, Government of West Bengal; and Additional Commissioner of Commercial Tax - Government of Orissa on various issues, including road ahead for insurance sector and its implications for retail automobile trade, environment pollution and VAT. We welcome your suggestions. With best wishes, Yours sincerely, Jayendra Kachalia