Address auto problems

The Rs 15,000-crore automobile industry is set for a take-off and the new government must address some perennial problems of the industry...

The Rs 15,000-crore automobile industry is set for a take-off and the new government must address some perennial problems of the industry. This will help the manufacturers, the consumer and even the government as the industry will record higher profitability.

The present system of signing memorandum of understanding MoU with the government by the foreign investors on production of cars should be changed. This puts quantitative restrictions on the production of cars which can lead to less investments into the country. The MoU system should be scrapped. The government should let the manufacturers decide how many cars they should produce and how many to sell in the domestic market and how many to export.

We also think that the government should prepare itself for the World Trade Organisation which can bring sea changes in the country8217;s automobile industry. For example, the government should take immediate steps to protect the industry 8212; especially foreign investors 8212; from cheap imports. If we allowimports at a lower tariff, the investments made by us will become redundant and hit our India operations. The industry will become sick and we will have Made in Japan8217; cars all over the country. Thus, India should come out with a strategy which should be ready for the WTO. Similarly, excise duty at 40 per cent and other duties in India are very high 8212; which makes a car unaffordable to a large section of the population. If the government rationalises the duty structure, I am sure it will help the automobile industry to push up sales and also help the government, since as volumes go up, so will the volume of tax.

On a micro level, Fiat India has already made investments of over US 200 million in India and we plan to bring in another US 220 million for our Palio project. We are extremely bullish on the Indian market and are focusing more on quality rather than quantity.

For example, our dealer network will go up to 70 by the end of next calendar. Instead of recklessly opening dealers, we are going slowso that dealers can be trained in customer care and service. Our Ranjangaon facility has a dealer training school and we are asking all our dealers to go though this course.

We are a long-term investor in India. Most of our new models including the present offering, the Uno, have been introduced after doing thorough research on Indian consumers. There are many manufacturers who are discounting cars in order to push sales, but we are against this practice.

In the coming months, Fiat will make some product changes in Uno and Siena in order to make our cars suitable to the Indian conditions. While Uno8217;s engine will witness some changes, we are planning to bring in Palio Weekend to India. As weekend concept is still new to India, we will launch the car as Siena Station Wagon.

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Subsequently, our world car Palio would be launched to take on the competition in the Zen segment. We have bought land and we will make investments in Ranjangaon, near Pune, in a brand new automobile plant. As and when the volumesincrease, we will start construction work at the new plant. We are not looking at the multi-utility vehicle MUV segment in India at present. Though we have a global tie up with Mitsubishi for launching a new MUV worldwide.

Consumers in India are becoming very demanding. Thus, Fiat is striving to provide cars and after-sales and services of global standards. India is a very important market for us along with Mexico and Brazil. Our world cars would be produced and launched in all these countries simultaneously thus showing out commitment to this country.

The author is the managing director, Fiat India Automobiles Ltd