There is also a severe shortage of talent

This has not been an easy year for small component manufacturers. Their revenues from overseas markets have been severely impacted thanks to the stronger rupee and, back home, they continue to face cost pressures from Tier 1 suppliers and OEMs.

Tight financing norms for two-wheelers have also resulted in local orders drying up this year and there is no indication that things will take a turn for the better during 2008-09.

The finance minister would, therefore, do well to consider setting up a modernisation fund for component makers on the lines of what it did for the textiles industry. This will ensure that they stay afloat and contribute to the growth of the auto sector.

These companies have at the helm dynamic entrepreneurs who have pulled out all stops to try and make a difference. A large percentage of them cater to the global aftermarket and this is where the strengthening rupee is hurting in a big way.

During Automechanika Frankfurt 2006, the biggest aftermarket event in the world, there were over 200 small players from Gujarat and Haryana who had put up stalls and were reaching out aggressively to potential customers from Europe and the US.

There is every reason to ensure that these companies do not fall by the wayside. Some of them have already indicated that they may have to retrench workers if export revenues continue to fall. They need the money for modernisation and R&D investments. This is where a fund set up by the Centre will help their cause.

Another issue that is of concern to the industry is the availability of talent. Even today, the manufacturing sector’s pay scales are not at par with IT and this is where the exodus becomes especially worrying.

Despite this, it is still tough to believe that a country with over a billion people finds it tough to throw up the right people for industry. The problem lies in a shortage of technical institutes and this is where the auto industry wants the government to play a far more active role in terms of financial support.

With more and more cars due to hit the roads, there is a greater need to supplement the efforts of the Automotive Research Association of India (ARAI) in processes like homologation, testing etc.

The government has acknowledged this in the Automotive Mission Plan where it refers to the NATRIP (National Automotive Testing and R&D Implementation Project) which will see the commissioning of world-class testing facilities in various parts of the country. This needs to be articulated with greater vigour in the Budget.

Haryana and Tamil Nadu have already been identified as locations for the NATRIP programme and more facilities will eventually dot the landscape.

This becomes critical when it involves homologation of imported cars and at the moment, it is only ARAI that meets this need.

The institute cannot cope with this load and this was especially apparent during the transition to Bharat Stage 3 emission norms in 2005. Cars, which were suitably retrofitted, had to wait for weeks before the ARAI gave its green signal.