NEW DELHI: JK Tyre Industries chairman Raghupati Singhania he said India’s automobile industry needs a series of boosts, including a speedy announcement of a vehicle scrapping policy, to rid the economy of a coronavirus epidemic that has intensified. Singhania said the recent decision to restrict imports of some pneumatic tires was a step in the right direction to boost domestic manufacturing. But he added that more measures were needed to speed up the process.

In an email interview with The Economic Times, company Managing Director Singhania also said, “Effective utilization of demand curbs will largely depend on the implementation of the much-needed retirement policy.” “Reducing the temporary GST on the automobile sector to 18% starting from the current 28% may also help increase demand.”

In terms of all categories, auto sales declined the most in the last quarter, down 75% YoY. Production and sales were severely impacted by the COVID-19 pandemic and embargo, resulting in a decline in production to 1.4 million units compared to the same period last year. Car sales for fiscal 2020 ending March 31 fell 18% to 21.5 million units. Singhania said that while demand has been recovering on a monthly basis since 5 since the market reopened this month, the industry is still in a stabilization phase, with a focus on improving the supply chain, returning the workforce and strengthening the business ecosystem. Demand during the holiday season is expected to be close to pre-COVID-19 levels.

JK Tire has shown good growth momentum in alternative markets, with business segments including commercial vehicle tires recording high double-digit growth in June. A few weeks ago, direct sales to automakers in the passenger car, two-wheeler and three-wheeler sectors also picked up in July. Personal mobility is expected to be a priority in the changing environment, which is likely to boost sales momentum,” Singhania said. Overall, the short-term outlook looks bleak, but the long-term growth prospects remain promising.”

Singhania said that JK Tire expects temporary and localized impact on some sectors, especially manufacturing and supply chain, as intermittent blockades are being imposed in some states. As such, the company is closely monitoring the COVID-19 trend and planning production and inventory accordingly to cope with the uncertainty and ensure availability when demand arises. Production is expected to reach 80% of pre-outbreak levels this quarter. Singhania acknowledged that managing liquidity during the coronavirus crisis was one of the biggest challenges facing the company. He added: “As a result, our current focus is on cash retention through a variety of measures, including timely or early collection of accounts receivable, prioritizing vendor payments, cost optimization, and a greater focus on overall efficiency.” We are in the midst of a major expansion project. We will prioritize and move forward.