An
Eventful Month
Jayendra Kachalia, President
Dear friends,
We have had two important events in the recent past. FADA,
along with its founder member - ADAM, organised its first
ever Regional Convention, namely, Western Region Auto Convention
on 26th February 2005 at Mumbai. The Convention evoked an
overwhelming response not only from members located in Mumbai,
but also in other parts of the country. Around 300 participants,
representing automobile dealerships, vehicle manufacturers,
banks, finance companies, insurance companies and equipment/component
manufacturers, had quite an exciting and educative experience.
A galaxy of eminent speakers addressed and interacted with
the participants on a number of topics and issues comprised
in four sessions at the Convention.
We, in FADA, are indeed grateful to the Hon'ble Chief Minister
of Maharashtra for having taken time off his busy schedule
to inaugurate the Convention and to give us the benefit
of his address. He, in fact, set the tone for subsequent
proceedings of the Convention and charged the participants
with his dynamic presence, wit and sense of humour.
There is no gainsaying that he is one of the most progressive
and responsive Chief Ministers of Maharashtra. Automobile
dealers in Maharashtra, in particular, are thankful to the
Hon'ble Chief Minister for confirming at the Convention
that registration of non-transport vehicles in Maharashtra
would be done at the dealerships without the need for the
vehicles to be taken to RTOs for inspection. We are touched
by his gesture of inviting a delegation of FADA for a further
discussion on streamlining and simplifying the procedures
and on the issues impeding the growth of automotive industry
and trade.
We were also privileged to have in our midst, Mr M K Sanghi,
President, ASSOCHAM and Mr Ravi Santhanam, MD, Hindustan
Motors at the Inaugural Session. Our profound thanks to
them for their worthy presence at the Convention in spite
of their busy schedule and sharing with us their vision
and wisdom. Their mature counsel, I am sure, will go a long
way in preparing the automobile dealers for the current
and emerging challenges.
It was also our honour to have distinguished guests and
speakers representing a wide spectrum of stakeholders in
automotive business. I take this opportunity to express
my gratitude and thanks to Mr G K Raman, Mr Imran Hassen,
Mr A K Birla, Mr N R Mohanty, Mr Ganesh Relekar, Mr Ramesh
Chandra, Ms Puloma Dalal, Mr Kinji Saito, Mr Rajiv Dube,
Mr Sachin Khandelwal and Mr Hormazd Sorabjee, who kindly
agreed to address and interact with the participants at
the Convention, and enlightened us with their precious views
and thoughts. Their words of wisdom provided a lot of food
for thought.
The Convention was a stupendous success in that the daylong
interaction brought to the fore many new ideas for all of
us in automotive business. The Convention also provided
a platform for all stakeholders in automotive business to
get an insight into the problems and issues currently confronting
us and emerging on the horizon, and to identify areas where
we could work together for a sustainable development of
automotive business.
I shall be failing in my duty if I do not acknowledge the
support extended by our esteemed sponsors. But for the support
of sponsors, it would not have been possible to organise
the Convention at such a grand scale. I am indebted to IFFCO-
TOKIO General Insurance Co Ltd, Eicher Motors Ltd, Piaggio
Vehicles Pvt Ltd, FUCON Technologies Pvt Ltd, ICICI Bank
Ltd, Indiacar Pvt Ltd, Kotak Mahindra Finance Ltd, Royal
Sundaram Alliance Insurance Co Ltd, The New India Assurance
Co Ltd, The Times of India and Fairfest Media Ltd, for their
kind support and patronage.
The other important event, during the month of February,
was the presentation of Union Budget by the Hon'ble Finance
Minister on 28th February 2005. Over the years, the Union
Budget has become an important annual event for the Government,
business class and people at large, because, it unveils
the Government's economic and social policies as well as
the direction where the country is headed for. Earlier,
the Budget used to be an annual ritual associated with presentation
of state of country's finances and allocations under various
heads, as also an exercise for mopping up additional revenues.
We, in automobile industry and trade, were expecting rationlisation
of excise duty on passenger cars at 16% at par with the
excise duty on other types of vehicles, especially, when
the passenger car industry is particularly performing very
well on both domestic and export fronts.
Passenger car industry has been a catalyst for overall economic
growth and its spin off on other sectors of economy, because
of its far-reaching forward and backward linkages, needs
no overemphasis. It would, therefore, have been in fitness
of things, had the excise duty on passenger cars been reduced
to 16% to give this important segment of industry a further
impetus. The reduction in peak customs duty and customs
duty on copper and aluminium is, however, likely to provide
some relief to the industry, which is reeling under the
rising input costs over the last 2 years.
Absence of auto industry specific measurers in the Union
Budget notwithstanding, continuing thrust of the Budget
on rural, social and physical infrastructure is expected
to lead to employment generation and the increase in income
levels and standards of living of the people, providing
indirect momentum to the growth of automotive industry and
economy as a whole. We, in FADA, also welcome the Finance
Minster's proposal for raising the exemption limit for tax
on individuals and reducing the corporate tax, which will
be stimuli for the industry.
Taxing fringe benefits and banking cash transactions, as
also the reduction in depreciation rates, are some of the
irritants contained in the Union Budget, which, we hope,
the Finance Minister will review before the Finance Bill
is passed.
The Finance Minister has put at rest speculation and uncertainty
by announcing that VAT will be implemented from 1st April
2005. The business community and the people alike, however,
continue to harbour apprehensions on the efficacy and effectiveness
of VAT in a federal system like ours.
The Union Budget is silent on two important areas of reforms,
namely, labour law reforms and disinvestment of PSUs. These
two reform measures need immediate push to make Indian industry
competitive in the global arena. We hope that the Government
will bring on board all the constituents of the coalition
at the Centre on these two important issues and initiate
necessary measures in this regard soon.
While the Budget with its massive allocations for the rural,
social and urban infrastructure, aims at propelling all-round
growth and development, converting outlays into outcomes
is a great challenge. The fact is that the successive governments
at the Centre have come up with a lot of pious intentions
and promises in the past, but we have not had a strong delivery
mechanism. In fact, many programmes announced in the previous
budgets have, either not seen the light of the day, or have
not reached the target groups. I hope that announcement
of putting in place a mechanism to measure development outcome
of all major programmes will translate into action to see
that the programmes and schemes enunciated in the Union
Budget are taken up in right earnest and completed without
time and cost overruns.
With best wishes,
Yours sincerely,
Jayendra Kachalia
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