The government is working out a scheme that will facilitate finance for the auto component industry hit by economic slowdown and increasing competition from abroad.
"My ministry is examining the feasibility of having a separate scheme which can facilitate financing to the sector," the Minister of Heavy Industries and Public Enterprises, Vilasrao Deshmukh, said at the ACMA annual conference in New Delhi on Thursday.
The Indian auto component sector comprises mostly small and medium units. And the foremost challenge for the industry is to raise required resources on their own.
Further, it is facing competition domestically from cheap imports and its exports, which constitute around 20 per cent of the sector's turnover, remain a matter of concern.
"This sector is facing stiff competition not only in the domestic market, but also in exports from other low cost countries," the minister said.
He emphasised the need to develop sustainable competitive advantage for the sector through greater investments in more efficient plant and machinery technologies, skill upgradation of employees and through adoption of latest efficient manufacturing processes.
In 2008-09, the exports grew by 6 per cent as compared to the Compound Annual Growth Rate of growth of about 25 per cent for the period 2003-07.
The Indian automotive and auto component industry posted a positive growth of 3 per cent and 6 per cent respectively in the last fiscal.
He stressed the need to redouble efforts to increase the exports and global outsourcing by making use of various measures to boost exports, announced in the recent Foreign Trade Policy.
Further, he said, the ministry is also undertaking efforts to facilitate greater international cooperation in the area of research and development.
