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India - Stimulus for bus makers takes a curious turn

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  • Eric Britton
    On Behalf Of Vinay Baindur Sent: Friday, 13 November, 2009 07:03 http://www.financialexpress.com/news/Stimulus-for-bus-makers-takes-a-curious -turn/539903/
    Message 1 of 1 , Nov 13, 2009
      On Behalf Of Vinay Baindur
      Sent: Friday, 13 November, 2009 07:03

      http://www.financialexpress.com/news/Stimulus-for-bus-makers-takes-a-curious
      -turn/539903/

      *Stimulus for bus makers takes a curious turn*
      Praveen Kumar Singh, Yogima Seth
      Posted online: Nov 11, 2009 at 0226 hrs

      *New Delhi*It was a key element of the fiscal stimulus package unveiled in
      January, but seems to have got lost in translation. To draw down rising
      inventories of commercial vehicles, the Centre had announced a Rs
      4,735-crore package for states to buy 15,000 buses for urban transport under
      the Jawaharlal Nehru National Urban Renewal Mission.

      But the urban development ministry’s technical specifications for these
      buses and states’ desire for high-tech features have meant that instead of
      ridding itself of inventories, the industry is now trying to scale up
      capacity. The net effect–the Centre is being forced to extend the deadline
      for the buses’ delivery further to March 2010 from the rescheduled date of
      December 31, 2009.

      “Car sales have improved, but commercial vehicles are picking up slowly.
      Most of the 63 cities have asked for low-floor buses, as they are
      good-looking and high-tech, irrespective of whether they are suitable for
      local roads. The industry is still developing the capacity to supply such
      buses, so their delivery will take more time,” heavy industries secretary
      Satyanarayana Dash told FE.

      “The stimulus measure envisaged the purchase of standard conventional buses.
      As a result, bus suppliers like Ashok Leyland and Tata Motors, which had
      enough capacity for standard buses, are now developing capacity for
      low-floor buses. So it won’t be possible for them to supply the buses before
      March 31, 2010,” Dash said.

      Ironically, the Society of Indian Automobile Manufacturers (Siam) had
      alerted the urban development ministry about the industry’s capacity
      constraints on low-floor buses as early as February. Yet, the final
      guidelines for the buses issued by the ministry asked for high-tech ultra
      low-floor (400 mm height) and semi low-floor buses (650-700 mm height).

      Though standard buses, with a floor height of 850-900 mm, were also
      included, the other technical specifications by the urban development
      ministry meant even those couldn’t be delivered fast. Most of the additional
      features are standard features in ultra low-floor buses such as audio and
      video cameras, vehicle tracking system and integrated common controls. From
      Rs 20 lakh a bus, standard buses that meet these tech specs cost over Rs 30
      lakh while low-floor buses cost between Rs 45 lakh and Rs 60 lakh.

      “The buses being ordered by the states are of all types, low-floor, semi
      low-floor and conventional. Within the broad categories, each state and very
      often cities within states have their unique specifications,”a Tata Motors
      spokesperson told FE.

      “Tata Motors has requisite capacity and the company, in any case, is acting
      with alacrity to deliver the buses,” the spokesperson added.

      According to the latest data, over 11,000 buses have been ordered with
      various manufacturers under the JNNURM—over 7,000 are standard buses, while
      the rest are in the low-floor category. Of these, a mere 1,500 buses have
      been delivered till October, with several hundred standard buses ready but
      languishing due to confusion over specifications.

      “We are ramping up production at Alwar by 50% from 200 units a month to 300
      units a month as well as start manufacturing 200 buses a month at our luxury
      buses facility near Tiruchirapalli to cater to the demand from southern
      states,” Rajiv Saharia, executive director (marketing), Ashok Leyland, said.


      While major players are scurrying to scale up low-floor capacities,
      passenger carriers’ sales continue to see negative growth. According to
      Siam, sales of medium and heavy passenger carriers declined by 13.1% at
      3,424 units in September 2009 against 3,938 units sold in last September.
      Sales of light passenger carriers or mini-buses also declined marginally at
      2,360 units vis-à-vis 2,384 units in September last year.
      On behalf of the industry, Siam has asked the ministry to further extend the
      delivery period, in the light of a varying range of specifications to be
      met.
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