August / September / October 2001

Dear Member,

This is my first communication to you after being elected as president for 2000-01. I would like to thank you for your confidence.

After a reasonably good year in 1999-2000, the automotive industry has again entered a period of negative growth. The general slow down in the Indian economy is severely affecting the commercial vehicles segment. The sale of passenger cars after an extraordinary year of growth has significantly slowed down. Tractors after a very poor start in the first



half-year show some signs of recovery. The only segment that continues to be good is motorcycles

This kind of turbulence in our industry may continue for a few years till the excess capacity created and the demand find near equal levels. Therefore we in the component industry must focus on exports. The removal of quantitative restrictions effective April 2001 and the excess capacity that global auto majors have all over the world will certainly affect the localization, which we all took for granted so far. We need to look for growth opportunities wherever they are. Auto–component exports increased by 20% in 1999-2000 and this is a good sign. I seek your support in achieving our target of US$ 1 billion in exports by year 2005.

There is another challenge particularly in the after market. We see signs of products coming at extremely low prices. The government has taken note of this and is willing to support industry where dumping is involved. Please do keep the Secretariat informed of any such imports in your area of activity.

Best wishes.

L Ganesh