The slowdown in the domestic economy calls for an adequate response from both the Central Bank and the government. The Reserve Bank of india (RBI) has gone for a repo rate by an unconventional 35 bps in its last policy meet. With the focus now on the government and a clamor on for a fiscal stimulus, Finance Minister Nirmal Sitharaman on Friday, August 23, announced a comprehensive package of measures to boost the economy.
The automobile industry is the pillar of the Indian economy, contributing 7.5 percent to the country’s GDP. The overall manufacturing sector contributes around 17 percent, and within the sector, the share of the automobile industry stands at 49 percent. The industry employs around 8 million people directly or indirectly.
However, the automobile industry is facing major headwinds both at the global and domestic level. As per projections, the global economy is expected to grow at 2.6 percent in 2019 compared to 3 percent in the previous year. Furthermore, the government's push for electric vehicles, and the imposition of BS-VI standards from April 2020, have left potential buyers confused. As per the latest data, passenger vehicles sales registered a declining growth rate consecutively for nine months and passenger vehicles sales declined by 31 percent YoY in July’19.
