The drop in car sales for a record eighth month in a row in June hits the component industry badly and so the government may announce some incentives to the auto component industry to boost its exports, reports media.
"The automobile components industry, particularly exports, has been facing a tough time. Both the Ministry of Commerce and Department of Heavy Industry are doing an assessment of the sector with a view to give a push to exports," an official told a leading news agency.
"Once the assessment is completed, both the ministries will see if incentives could be given to the sector," the official added.
The auto component industry has felt the hit of the drop in car sales, which fell for a record eighth month in a row in June. In the first quarter of this fiscal, passenger vehicles sales have dropped 7.24 percent from 6,54,858 units in the same period in the previous fiscal, reports media.
Earlier, the Automotive Component Manufacturers' Association of India (ACMA) has approached the Department of Heavy Industry to take steps to support the industry and address issues such as the high cost of borrowing and export incentives in the wake of rupee depreciation.
According to the official, the outlook (auto components exports) remains uncertain for the current fiscal as there is a weak demand globally, report added.
The component makers are facing severe slowdown. The industry is expecting some relief from the government either in the form of excise duty cut or interest rate cuts or otherwise.
Back in 2008-09, the government had reduced the excise duty on two-wheelers, small cars and commercial vehicles to 8 per cent. At present, there is a general sentiment in the industry that the government might work out a similar stimulus package for the auto industry, reports media.