T. Murrali

Chennai, Dec. 21 The US government announcing a short term loan of $13.4 billion to save its automobile industry from bankruptcy has evoked hardly any response from the auto component exporters in India.

Auto component manufacturers who spoke under condition of anonymity said this initiative was only a temporary measure. Of the sanctioned amount, General Motors is to get $9.4 billion and Chrysler LLC $4 billion. Both these companies had warned that they could financially collapse within weeks. The loan has been given for these companies to come out with a restructuring plan, they said. The restructuring must be completed by March to show how these companies would ensure their survival. However, there is no guarantee that these companies would tide over their financial crisis, some suppliers felt.

Ford, however, has been maintaining that it may not need the fund now.

Nearly 50 Indian companies export components to General Motors and a few supply to Chrysler. Of the total auto component exports of Rs 14,130 crore last year, North America accounted for 28 per cent and the EU 38 per cent.

The loan does not encourage the component exporters as it could only help the US auto companies buy a little time before they face bankruptcy, they said.

The silver lining in the cloud is that the loan package would reduce the possibility of job cuts and boost the morale of the people, which might trigger vehicle sales and improve volumes.

Auto Component Manufacturers Association of India (ACMA), the apex body of the auto component manufacturers, is expected to spell out its official statement on Monday.

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