FADA President's Message May 2004 Looking forward to a Better Tomorrow Deshnidhi Kasliwal Friends, After the turn of events and suspense lasting 2-3 days, it is heartening that Dr Manmohan Singh has taken over as the Prime Minister of the country. The industry, trade, investors and the public at large have welcomed this development. Hopefully, a stable Government will be in place soon and, with Dr Singh, who is considered as the architect of reforms in India, at the helm of affairs, economic growth and development will receive a further boost. Even otherwise, the rising investment levels and hectic pace of economic activities despite uncertainty of elections, shows that the Indian economy has matured. The fluctuating fortunes in political arena and sensex notwithstanding, the automotive business continues to be upbeat as evident from the sales performance of the industry in Apr'04. Various economic growth projections further point to the growing robustness of the Indian economy. The NCAER has projected a growth of 7.1 per cent for 2004-05. Asian Development Bank (ADB) too, has projected a growth of 7.4 per cent for the Indian economy backed by an industrial growth of over 10 per cent. A positive development of the industrial sector as pointed out by NCAER is the rising broad-based growth with sectors such as automobiles, steel, cement, edible oils, consumer durables contributing significantly to the industrial growth. Projections of a good monsoon for the second consecutive year too, augurs well for the automobile industry in general and dealerships in particular, in view of the growing rural market for all products including automobiles. A word of caution here. The rising oil price is a cause of concern. I am afraid, the oil price which is already ruling at a very high level of over $40 per barrel may touch $45 per barrel, which is alarming. In spite of rising international prices of crude oil, we have been spared the agony of hike in petroleum prices, thanks to the elections. However, it may not be possible to hold the price line for along. As the new Government gets down to business, we are likely to witness the sharp increase in the petroleum prices, which may put a damper on the buoyant sentiment. Unmindful of these developments, we would have to gear up to meet the challenges of growing domestic demand and rising expectations of consumers. As you will observe in a message by Mr Rajiv Bajaj, Jt. MD, Bajaj Auto Ltd, published in this issue, dealerships will have to be innovative in their approach to be successful. Just as in other retail businesses, a retail revolution, characterised by distinctive service features is in the offing in automobile sector. With the consumers becoming more selective and demanding, it is the personalised and customised services that are going to win them over. I am grateful to Rajivji, who has come forward to share his wisdom with the automobile dealer fraternity. It is also heartening to know that Mr Rajiv Bajaj is going to take over as the Managing Director of Bajaj Auto from 1st April 2005. We, in FADA, fervently hope that he would continue to provide his guidance from time to time for sustainable development & growth of automotive industry and trade. FADA, as a body of automobile dealers, has been making earnest efforts on its part to equip its members to meet the challenges arising out of the paradigm shift in automotive scenario. Besides undertaking a number of initiatives of direct benefit to dealerships, such as, tie-ups with vendors and suppliers, strengthening its training wing for improving technical & managerial skills of automobile dealers, FADA has been in constant touch with the Central & State Government authorities with the aim of streamlining the policies & procedures governing transport sector and removal of hurdles impeding its growth. As informed through this column in previous issues, FADA has undertaken to organise a series of seminars on the subject across the country. Close on the heels of a seminar held in March at Jaipur, another seminar was organised at Chandigarh on 17th April, at which the Director (TRU), Union Ministry of Finance, Central Excise Commissioner and Deputy Commissioner, Chandigarh along with their team of officials interacted with the participants. The seminar went a long way in demystifying various issues arising out of service tax and procedural aspects connected therewith. The applicability of service tax on the amount received by automobile dealers from banks and finance companies for arranging auto finance for sale of vehicles is one of the grey areas. The issue being of immediate concern to automobile dealers, a FADA team led by Mr Ramesh Suri, Past President held meetings on this issue with Mr B K Mishra, Member (Service Tax) and Mr Gautam Bhattacharya, Director (TRU), CBE&C in the last week of April 2004. Following these meetings, FADA has submitted a representation to the Union Ministry of Finance. Hopefully, the matter will get sorted out soon, with the installation of new Government. FADA is also tying up with ICICI Bank for a co-branded ICICI-FADA Credit-cum-Membership Card and the proposal is being fine-tuned and almost ready for introduction. I shall be happy to receive your views and suggestions on the issues that are of concern to the dealer fraternity so that we could take them up suitably with the concerned authorities. Please also send us your suggestions and advice on the activities that we should undertake for the benefit of our members. With best wishes, Deshnidhi Kasliwal President