India Cannot Achieve $5 Trillion Economy With Automotive Industry Slowdown: Pawan Goenka

The Indian auto sector continues to soldier amidst the trying times and sales are far from seeing a steady revival for automakers. The auto industry is also one of the largest contributors to the country's manufacturing GDP and the slowdown is certainly hurting India's economic growth too. Speaking on the same, Pawan Goenka - Managing Director, Mahindra & Mahindra said that the automotive industry will not achieve the current government's $5 trillion economy vision with the slowdown. Goenka was speaking at India Conclave 2019 held in Mumbai on Monday and stressed that the Indian industry needs to pave its own path with a long-term policy rather than aping the west.

Speaking at the event, Pawan Goenka said, "If the economy has to grow at 8.5 per cent, the manufacturing sector has to grow at a compounded annual growth rate of 12.5 per cent and if the manufacturing sector has to grow at that rate, the automotive industry needs to grow faster. Clearly underlining how critical the growth of the sector is."

Goenka further added that the manufacturing GDP needs to grow to $1.2 trillion, which a growth of 12 per cent in the coming four to five years to achieve the $5 trillion mark.

The Indian auto sector has declined by over 15 per cent in volumes this fiscal with sales witnessing its lowest drop in nearly two decades. Speaking further, the Mahindra Boss iterated that growth in the domestic market can only be achieved in tandem with more exports and accelerating electric vehicle revolution, where the competency gap between India and other global markets is lower.

The auto industry collectively voiced a similar opinion at the event. RC Bhargava - Chairman, Maruti Suzuki said that that the economic infrastructure needs a drastic change. He said, "The attitude of people need to change, people who adjusted to working in a closed competitive economy, have to change the way they function. In the political and social environment that exists in India, it is not possible to attain success with the Western style of management."

Agreeing with Bhargava, Rajeev Chaba, - MD, MG Motor India said, "If we continue doing what we did for the past 10 years, we cannot achieve this target, then the number ($5 trillion) will just remain a number. The focus should be on the customer and ensuring that the products are designed to meet their needs and their wallets. All that industry expects is a clear long term policy on emission, fuel, safety."

The domestic sales and production have grown at a CAGR of seven per cent in the last five years. Manufacturers have been struggling to keep up with the increase in vehicle prices by 10-15 per cent in the past year, owing to vehicles being upgraded to new safety and emission regulations. This, coupled with a low buying sentiment, an unstable economy and an election period, saw sales dropping month-on-month since the last festive season. The Indian passenger vehicle market stands in the top five globally. It is the largest two-wheeler market in the world and in the top seven in the commercial vehicle space.