New Delhi: German auto component maker Bosch has said its business is yet to fully recover from the impact of note ban and it may take another couple of months for normalcy to return.
With automobile sales plunging to 16-year low a month after the government demonetised higher denomination currency notes on November 8 last year, India very quickly went into e-wallets. Since then, the downturn has reduced but is yet to be totally eliminated, said Soumitra Bhattacharya, the firm’s India head.
The group, which currently has a turnover of around Rs. 18,000 crore, gets around 85 per cent of its revenues from the automotive business.
“We are component manufacturers for OEMs. If OEMs produce and sell less, our demand naturally has lag effect. So, it did had an effect then it picked up again marginally in January and February was relatively better,” Mr Bhattacharya told news agency Press Trust of India in an interview.
Most of the major segments, including scooters, motorcycles and cars, witnessed record decline in December 2016 sales as the automobile sector bore the brunt of negative consumer sentiments in the wake of the ban of Rs. 500 and Rs. 1,000 bank notes announced in November.
Vehicle sales across categories had registered a decline of 18.66 per cent to 12,21,929 units in December 2016, compared to 15,02,314 units in December 2015.
Asked about the quantum of the impact, Mr Bhattacharya said: “The December sales in the automotive sector was lowest in 16 years thats tells everything and we are 85 per cent based on automotive.”
He added that the country also recovered fast due to introduction of the e-wallets.
“Demonetisation did have an impact for all of India and industry… However, while having an impact, India very quickly went into e-wallets, so there was an impact. The downturn has reduced but it is not totally eliminated,” Mr Bhattacharya said.
Asked as how long the impact last, he added: “It could be for couple of months, it could extend. The intensity is also not known, but I guess tough days are behind us.”
On challenges in the Indian market, Mr Bhattacharya said the major issues are related to ease of doing business and requirement of effective labour laws.
“One challenge in India which both the state and central government are aware is that how to increase ease of doing business. All of us know where we in India are in the world ranking,” he added.
One of the biggest issues for Indian environment is to improve the transparency index and the holistic ease of doing business in India, Mr Bhattacharya said.
Besides, the country needs to implement few but effective labour legislations which protect the unorganised, but are also fair towards the labour and employer in the organised sector, he added.
“Sometimes, in the organised sector there are many laws that are inhibiting competitive practices in terms of worldwide productivity standards, efficiency levels,” Mr Bhattacharya said.