The exporters concern, Commerce Secretary, GK Pillai, said that in the coming months the government will watch out the sectors that are facing difficulties because the slide in the exports has been taking place in October and November. He said, “For the time being in the light of the global slowdown this is basically giving the exporters a little bit of a cushion, so that they are not too adversely affected.”

Pillai added, “I think sectors which have not been covered, we would look at them in the light of the exports figures for November and December, whether there is a need for any further assistance to other sectors also.”

Chandrajit Banerjee, Director General of CII, said it is a lot for the industry as the 4% across the board reduction of Cenvat creates an environment which really helps the industry to look at pricing which also looks and helps them to pass this on and create an environment, where it can generate more demand. “This is the first step and the government has concluded by saying that it will wait and watch the situation, and there is where I see that this dialogue would help us address the crisis together,” he said.

Subhash Mittal, Convenor, FIEO, feels the package has significantly fallen short of trader's expectations. He said "Today, the situation is very peculiar and to maintain the same growth rate as to what we had last year, we need to be more aggressive and snatch the businesses from more competitive countries, where our product prices comes down drastically and we have more market aggressive schemes."

Mittal said, "The government has announced 2% for only four months, what the trade was really expecting was upto 4% or about 7% and that too not only for three months but at least for the financial year ending 2010."

Dilip Chenoy of SIAM said this is first of a series of packages that the government is announcing in terms of making products available at reduced price to the customer and in terms of being able to address some of the increased liquidity in the market place. He added, “Yesterday’s RBI announcement and today’s fiscal stimulus is a good beginning for the whole policy package for the industry. It is not a complete package but as the Commerce Minister said, more maybe on the cards soon.”

RC Bhargava, Chairman, Maruti Suzuki said that the 4% reduction in cenvat implies that every product, including commercial vehicles, passenger cars and two wheelers will come down by 4%. He added, “All of this 4% has to be passed on and that’s been our practice throughout. The new rates will apply and every car will be cheaper by 4%.”

With respect to the issue of increase in demand, Bhargava said, ”The one area which is holding back demand is the system of banks getting confidence to lend against cars and other automobiles. The repossession guidelines which have been laid down by the RBI are very difficult to implement and they are creating a lot of difficulties on banks and unless those are reviewed the impact is going to be limited.”

Pawan Goenka, President, Auto Business, M&M said, “We will pass on all the reductions to the consumer, in fact, on our high end models we will try and see if we can do a little better than 4% and pass on a little more to the customers.”

Goenka added that the 4% reduction is a little better than what he had expected from this package. However he is disappointed that the Rs 15–20,000 ad hoc increase that happened in June has not been removed and that could be removed also. “The other side which has not been taken care of fully is availability of finance at the retail level, so even though there is a reduction in the repo rate, etc. but whether that’s going to translate in the availability of finance for auto retail is not known yet,” he said.

Pradeep Jain of Parswanath Developers said, “I am completely disappointed, we were expecting much more.” “This package, he said, “gives only eyewash to the real estate sector.”

Jain feels the package is talking about PSU banks announcing upto Rs 5-20 lakh, which can be done by dropping the rate of interest in the tune of about 7-8%. He said, ”We were expecting higher because at this point of time the sector under fire. The real estate is the growth engine of the country and they are talking only upto 5–20 lakh. The input costs and taxes are too much in this point of time, what ever property we sell, out of Re 1, 0.34 paisa goes in the government’s pocket on account of direct or indirect taxes. So, I am completely disappointed.

Jain added, “Nothing is available in Rs 20 lakh in tier I or tier II cities, and what the government wants to tell to the public to create demand in the housing sector we are developing the economical weaker section. There is no support to the real estate developer as well as to the home buyer.”

Subba Rao, CFO, GMR Infra, said that what has been done is a right move but the quantum of the right move is totally insignificant, given the scale of clients that we have. He said, “So, this kind of a quantum is nothing in front of what we need. Hence, though it is a step in a right direction the quantum is absolutely inadequate and it is not going to help much to the industry.”

With respect to the elimination of import duty on naphtha, Rao said, “Naphtha prices have already come down significantly. From Rs 52,000 it has come down to 27,000. So it is not going to help much. Yes, it helps but it doesn’t create the capital formation, so what is the need of the hour is to make available the credit that is required at competent prices to spurt the entire demand by relieving the use that has been there in the last few months, so that is what is required so the removal of import duty on naphtha does not help much.”

source: Moneycontrol