aci_april2015-1April 2015

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Positive Outlook

The Reserve Bank of India (RBI) announced a surprise repo rate cut by 25 basis points in March, which was not made during the regular cycle for monetary policy decisions and announcements. Earlier, in January, RBI had lowered the repo rate from 8% to 7.75%. Both rate cuts this year were outside the central bank’s scheduled policy review meetings. The cut comes just a few days after the government and the RBI agreed to formally adopt targeting inflation, though the central bank introduced its own targets a year ago. As far as the automobile industry is concerned, this rate cut is like a boon, since there was no respite from excise duty in the Union Budget, as also a sudden spike in fuel prices. Recently, petrol and diesel prices were each hiked by about Rs 3/ltr.

The rate cut came 4 days after the Finance Minister Arun Jaitley’s first fullyear budget, which increased public investment by Rs 1.25 trillion and set apart an additional Rs 70,000 crore for infrastructure spending to boost economic growth and encourage private capital expenditure. Meanwhile, auto makers welcomed RBI’s move to cut the repo rate, which would translate into actual gains for vehicle buyers only when banks passed on the benefits to them.

With all these activities, the Indian economy is showing increasingly stable signs of recovery and the recently concluded ACMA Automechanika held in New Delhi has reiterated the fact further. The Cover Story of this issue is on ACMA Automechanika and most of the companies we spoke to were very optimistic about growth; a positive mood throughout is reflected even in visitors who are seeking components, services and manufacturing options for the automotive industry. This clearly sends out the message that the industry, which was affected by the slowdown beginning in FY 2012-13, is recuperating gradually, with passenger cars followed by the commercial vehicles. On the other side, most of the component companies showed interest in exporting to Europe and US but, surprisingly, Indian manufacturers wanted to export to China; this shows how Indian companies are geared to face challenges in terms of quality and cost.

In this issue we have covered Roots Industries in the Shopfloor Sojourn section; this is the first time the company has allowed a media house to cover the entire plant and we are proud to be the first magazine to do so. This southern company is silently manufacturing loud horns for the World. In addition, we have Honda Unicorn 160 in the Technology & Innovation section and lot more stories on the component manufacturers.

Wishing you happy reading. Please do send in your comments.

Bhargav TS
Executive Editor


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