The Society of Indian Automobile Manufacturers (SIAM) on Wednesday said the size of the domestic passenger vehicles market is likely to touch 5.6 million units by 2017, despite the market witnessing a slowdown in recent months.
"The growth figure that we are now working out for the 12th Five-Year plan indicates that we may see domestic passenger vehicle sales of 5.6 million units and the export of 1.3 million units by the end of 2017," SIAM President Pawan Goenka said at the industry body's annual summit.
Vehicle manufacturers as well as component players need to plan their investment and capacity expansion strategy to meet this demand, he added.
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He, however, said due to the slowdown in recent months, the industry "may have to revise the growth projection for passenger vehicles and commercial vehicles further."
SIAM said it may further lower its growth projection for vehicle sales in the country from the earlier estimate of 11-13 per cent announced two months back.
In July, SIAM had lowered its vehicle sales growth forecast for FY2012 to 11-13 per cent from the earlier estimate of 12-15 per cent made in April, mainly due to higher interest rates and rising fuel prices.
"As money and fuel became expensive, the market sentiment was gravely affected and the passenger vehicle segment de-grew 8.9 per cent in July and again by 5.7 per cent in August," Goenka said, adding that the industry is hoping that the forthcoming festive season will see a recovery in the passenger car sales.
Talking about diesel prices, Goenka said the government should come out with a national plan and strategy for utilisation of the fuel in the transport sector, rather than discourage its usage.
Similarly, a renewed focus needs to be put on strengthening of infrastructure for gaseous fuels such as CNG and LPG, Goenka added.
He also urged the government to extend the Duty Entitlement Passbook Scheme, which incentivises exporters with tax benefits, beyond September 30, as no alternate scheme has been offered so far.
In addition, he said: "The auto industry is awaiting the implementation of GST, which will eliminate many of the embedded taxes that make the industry globally non-competitive and create distortions."
Goenka further said the Indian auto industry can play a very critical role in achieving the manufacturing sector's target of contributing 25 per cent of the GDP by 2025.