Rural demand has emerged as a green shoot in an otherwise worrisome demand outlook for the Indian auto industry in FY21.
Accordingly, not just accelerating agricultural growth, the fiscal support package along with a healthy monsoon are expected to generate some demand for automobiles that might avert a total sales wipeout in FY21.

Notably, two-wheelers and tractor demand has seen some healthy traction.

Speaking to IANS, Society of Indian Automobile Manufacturers' Director General Rajesh Menon said: "There is clearly a pick-up in rural demand. We are also seeing some green shoots in demand for two-wheelers, Small Commercial Vehicles (SCVs), and small cars."

"The agricultural sector package announced by the central government, under the 'Atmanirbhar Bharat' initiative, coupled with a healthy monsoon, is likely to benefit the auto sector."

Nevertheless, he said, the Covid-19 induced economic contraction will make a substantial dent on India's auto sector.

The industry fears that sales might decelerate between 26 and 45 percent on a year-on-year basis in 2020-21.

The forecast is, in part, co-related to the prediction of an overall dip in India's GDP growth rate. Recently, national and international monetary agencies have cited a range of minus 4.5 to 5 percent contraction in India's GDP growth rate. (IANS)