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Expectations in two wheeler industries in future:

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Sunanda K. Chavan
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Expectations in two wheeler industries in future: - October 7th, 2010

Expectations in two wheeler industries in future:

The automobile and auto components industry, having units in North India has, expressed cautious optimism about the improvement in business prospects in the next six months. This has been the finding of the Business Perception Survey for auto and components industry carried out by PHD Chamber of Commerce for units located in Haryana and Uttar Pradesh.

The business confidence displayed by this sector, is borne out by the fact that around 60% of the respondents expect a growth in sales during the next six months. Another 20% expect to retain their sales margin. Only around 20% expect lower sales in the coming months. Besides, 60% expect their profit margins to either increase or remain the same in the coming fiscal and around 40% anticipate the profits to decline.

Companies are also upbeat about their future exports prospects with almost every company predicting a higher or the same level of exports. According to the survey, while the majority (around 70%) has described the prospects of business improvement in the next six months as average, a significant 30% of the respondents expect an improvement in general business prospects for their company over the next six months.

However, none of the companies surveyed felt that the climate would worsen. The majority of around 80% expect a rise of up to 10% in their business activities. Around 20% of the respondents expect their business to grow beyond 10% in the next 6 months.

According to the PHDCCI Survey an upturn in business sentiment is also evident as the majority of the respondents (60%) are contemplating fresh capital investment in the existing business units in the coming months. The survey found that around 40% of the respondents achieved capacity utilization of over 80%. Another 40% achieved between 61-80% and 10% of the respondents have recorded 41-60%.


It found that 10% recorded a capacity utilization of below 40%. But despite the above conditions around 60% of the respondents felt that they have idle capacity of at least 20%. This shows that the situation on the domestic front, though favorable, is not particularly upbeat to revive business confidence in industry. The revival of domestic demand continues to be a cause for concern.

The job prospects do not seem unusually bright with only 20% of the respondents contemplating fresh recruitment while 80% apprehending employment to either remain the same or suffer a decline. As per the survey findings, the respondents find themselves constrained by the business environment prevailing in North India.

The survey reveals that among the four most important factors, which come in the way of business development, infrastructure and power remain the foremost problem areas. Industry is of the opinion that the prevalence of bad roads as well as inconsistency and poor quality of power and high power tariff is adversely affecting their cost of operation.

The other three major impediments to business, ranked in the survey, are archaic labor laws, multiplicity of taxes at the state level, corruption and intransigent attitude of government and inspector raj. Some of the other factors, which negatively influence industry, relate to the worsening law and order situation and corruption. Industry is also equally divided in its view regarding the impact of drought on the performance of the company. Around 50% perceive that the impact of drought would be negative while the remaining 50% feel otherwise.


The survey showed that despite the hurdles which come in the way of doing business in the North, a majority (50%) do not agree that they would have done any better if they were located in South India. Hence they prefer to continue their operations from their present location rather than relocate their base to South India, which is generally perceived to have a more professional environment. Nevertheless, industry feels that there is an impelling need to focus on internal reform, which would revive demand and improve the investment climate in the region.

In this context, the respondents have made the following suggestions: - Efforts should be made to effect simplification of procedures by implementing single window clearance and check harassment to industry on account of inspector raj. - Ensure greater accountability of government officials and impose penalty for unjust harassment. - Ensure provision of better infrastructure facilities like roads, ICD and power. Power tariff needs to be lowered and Plots in industrial area should be made free-hold. -The survey states that there is need to effect simplification in tax administration and ensure rationalization of tax structure in order to promote cost effectiveness in industry and help companies undertake corporate planning.


Besides, all taxes and levies should be integrated under VAT. - The barriers to free movement of goods should be removed and procedures should be streamlined. - Labor laws should be made more flexible in order to augment competitiveness of industry. -The industry has also opined that government rules and regulations should be made more transparent. There is need for a focused and consistent government policy and its effective implementation. A flexible approach is needed keeping in view the overall objective of ensuring all round development.
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Re: Expectations in two wheeler industries in future: - November 21st, 2017

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Originally Posted by sunandaC View Post
Expectations in two wheeler industries in future:

The automobile and auto components industry, having units in North India has, expressed cautious optimism about the improvement in business prospects in the next six months. This has been the finding of the Business Perception Survey for auto and components industry carried out by PHD Chamber of Commerce for units located in Haryana and Uttar Pradesh.

The business confidence displayed by this sector, is borne out by the fact that around 60% of the respondents expect a growth in sales during the next six months. Another 20% expect to retain their sales margin. Only around 20% expect lower sales in the coming months. Besides, 60% expect their profit margins to either increase or remain the same in the coming fiscal and around 40% anticipate the profits to decline.

Companies are also upbeat about their future exports prospects with almost every company predicting a higher or the same level of exports. According to the survey, while the majority (around 70%) has described the prospects of business improvement in the next six months as average, a significant 30% of the respondents expect an improvement in general business prospects for their company over the next six months.

However, none of the companies surveyed felt that the climate would worsen. The majority of around 80% expect a rise of up to 10% in their business activities. Around 20% of the respondents expect their business to grow beyond 10% in the next 6 months.

According to the PHDCCI Survey an upturn in business sentiment is also evident as the majority of the respondents (60%) are contemplating fresh capital investment in the existing business units in the coming months. The survey found that around 40% of the respondents achieved capacity utilization of over 80%. Another 40% achieved between 61-80% and 10% of the respondents have recorded 41-60%.


It found that 10% recorded a capacity utilization of below 40%. But despite the above conditions around 60% of the respondents felt that they have idle capacity of at least 20%. This shows that the situation on the domestic front, though favorable, is not particularly upbeat to revive business confidence in industry. The revival of domestic demand continues to be a cause for concern.

The job prospects do not seem unusually bright with only 20% of the respondents contemplating fresh recruitment while 80% apprehending employment to either remain the same or suffer a decline. As per the survey findings, the respondents find themselves constrained by the business environment prevailing in North India.

The survey reveals that among the four most important factors, which come in the way of business development, infrastructure and power remain the foremost problem areas. Industry is of the opinion that the prevalence of bad roads as well as inconsistency and poor quality of power and high power tariff is adversely affecting their cost of operation.

The other three major impediments to business, ranked in the survey, are archaic labor laws, multiplicity of taxes at the state level, corruption and intransigent attitude of government and inspector raj. Some of the other factors, which negatively influence industry, relate to the worsening law and order situation and corruption. Industry is also equally divided in its view regarding the impact of drought on the performance of the company. Around 50% perceive that the impact of drought would be negative while the remaining 50% feel otherwise.


The survey showed that despite the hurdles which come in the way of doing business in the North, a majority (50%) do not agree that they would have done any better if they were located in South India. Hence they prefer to continue their operations from their present location rather than relocate their base to South India, which is generally perceived to have a more professional environment. Nevertheless, industry feels that there is an impelling need to focus on internal reform, which would revive demand and improve the investment climate in the region.

In this context, the respondents have made the following suggestions: - Efforts should be made to effect simplification of procedures by implementing single window clearance and check harassment to industry on account of inspector raj. - Ensure greater accountability of government officials and impose penalty for unjust harassment. - Ensure provision of better infrastructure facilities like roads, ICD and power. Power tariff needs to be lowered and Plots in industrial area should be made free-hold. -The survey states that there is need to effect simplification in tax administration and ensure rationalization of tax structure in order to promote cost effectiveness in industry and help companies undertake corporate planning.


Besides, all taxes and levies should be integrated under VAT. - The barriers to free movement of goods should be removed and procedures should be streamlined. - Labor laws should be made more flexible in order to augment competitiveness of industry. -The industry has also opined that government rules and regulations should be made more transparent. There is need for a focused and consistent government policy and its effective implementation. A flexible approach is needed keeping in view the overall objective of ensuring all round development.
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