The recent trend of increasing interest rates may not be a worry for the long-term growth scenario of the domestic auto sector, Mr Baba N. Kalyani, Chairman and MD of Bharat Forge – the flagship company of the Kalyani Group.
Bharat Forge is among the world's largest forgings manufacturers and a major supplier to automotive industry. The Kalyani Group has diversified business interests across sectors like capital goods, steel and auto component manufacturing.
“For the auto industry one needs to take a medium to long-term view. Because of the increasing interest rates a small drop in sales is normal. But that's the case everywhere else as well. I believe the market will triple in 10 years time,” said Mr Kalyani.
He added, “I do not think 20-30 per cent growth (as seen in the past year), is sustainable. I think we should see healthy growth of 18 per cent.”
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Mr Kalyani further said that the auto ancillary sector needs to invest far more on developing its own technology and not be dependent on global firms for product development.
However, he said that a much more serious “regulatory push” would be needed if the Government wants to take up the share of the manufacturing sector in GDP from the current 15 per cent to 25 per cent over the next few years. Such a target is part of the new manufacturing policy that is soon to be finalised by the Government.
“Manufacturing needs to grow at 11-12 per cent at least and no longer at seven per cent if the Government hopes to achieve its goal,” he said, adding that such a policy push should part of new manufacturing policy.