The Hindu Business Line : Mixed response from auto sector

New Delhi, Jan. 2 The Government’s measures to revive the sagging commercial vehicle sales as a part of the second fiscal stimulus package has been greeted with a mixed response from the industry.

The government on Friday announced a 50 per cent depreciation on commercial vehicles purchased between January-March 2009 and one time assistance to states under the JNNURM for purchase of buses for urban transport system. However, it has not spelt out the details of the scheme. “A scheme towards this end will be announced shortly,” the Government stated. To increase lending for purchase of commercial vehicles, the Government has also said that it will work out an arrangement through which public sector banks will be provided with a line of credit to non banking finance companies.

While welcoming the measures, Tata Motors’ Managing Director, Mr Ravi Kant, said more steps were needed and the Government should also ensure that ultimately liquidity reached customers at reasonable costs.

“The current depreciation benefit is 20 per cent on purchase of commercial vehicles. With the government having increased the depreciation benefit to 50 per cent, it will provide incentive to buyers who have deferred their purchases, ” said Mr Vinod Aggarwal, Chief Financial Officer, Eicher Motors Ltd.

Mr Dilip Chenoy, Director General, Society of Indian Automobile Manufacturers, welcomed the measures.

According to dealers, the measures may favour the manufacturers, but not help dealers significantly.

“ The depreciation benefit is relevant only for large fleet operators with a sizeable income to avail of income tax benefit. But at a time when the income is not so significant in the transport industry, the incentive is too less to claim such benefits. Even the measures to provide finance for urban buses would help companies directly but not retail sales. However, the mechanism to increase lending to public sector banks is a good measure,” said Mr Rakesh Jain, a city-based commercial vehicle dealer.

More Stories on : Automobiles | Financial Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page