The automobile industry on Tuesday welcomed the RBI’s decision to cut the repo rate, saying the step could revive the industry — not immediately but in the long term.

“It will not immediately revive the industry, but it is a good move and on the right path by the RBI, as it was more important for controlling the inflation,” Vishnu Mathur, Director-General, Society of Indian Automobile Manufacturers, said.

He said the RBI, in any case, was not expected to announce a higher repo rate cut or CRR cut at one go, and it was to indicate to the Government that it must take some fiscal moves in the upcoming Union Budget.

“But it was a step forward and good for the auto industry, as now the companies can focus on growth as a priority,” he said.

Pawan Goenka, President, Automotive and Farm Equipment Sectors, Mahindra & Mahindra, said Tuesday’s combo of repo and CRR cut was a welcome announcement and, hopefully, it would help revive investments in the core sectors, which the economy badly needs.

“Over the past few months, economic growth has clearly bottomed out, and the slowdown in manufacturing is a concern. Coupled with the recent policy announcement by the Government, I see this as a good beginning,” he said.

Kapil Arora, Partner and Automobile Industry Analyst, Ernst & Young, said: “It will take some time to impact the financial market. But at the same time, sentiment is there to liquidate the market, as it will help manufacturers as well. It will be positive, not only for the passenger cars, but also commercial vehicles and two-wheelers.”

ronendrasingh.s@thehindu.co.in

(This article was published on January 29, 2013)
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