Bus and SPV Expo showcases opportunities in Indian bus market
In its bid to give a major boost to the bus segment, the Centre has expanded the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme to provide support to State Governments for replacing their fleet of buses. In total, 15,000 buses would be bought in the next 90 days for the purpose, for which the Centre will give subsidy as envisaged in the guidelines of the programme.Under the project, Delhi will get 1,500 buses, while Mumbai will have 1,050, Bangalore 700, Kolkata 1,200, Hyderabad 700 and Chennai will have 800 buses. The programme will broadly involve an investment of around Rs. 7,000 crores, of which the Centre’s share will be around Rs. 4,000 crores.
Addressing the media at the inauguration of the Bus and SPV show, Mr.Dilip Chenoy, Director General of SIAM told that, the Government is considering another stimulus package for the automobile sector, which will lead to replacement of about 40,000 buses of State transport corporations (STCs). In a study conducted for the purpose, it was found that there are more than 32,000 over-aged buses which are being operated by various state transport corporations. The over-age could be both interms of the years and the number of kilometers covered. hence the government has decided to replace 40, 000 of these old buses in 2009-10. These buses will be more in the Mofussil category priced between Rs. 15 to 20 lakhs.
The bus segment is in for exciting times in 2009-10 and it is to showcase this opportunity that the Bus and SPV show was organised by CII, SIAM and ACMA. The event held between 11th and 14th of March 2009, had participation from 5 major players in the industry including Tata Motors, Ashok Leyland, Volvo, Mercedes and Swaraj Mazda. Some of the component majors including Bosch, Allison Transmission and Vapor bus also participated in the event. SIAM is planning to organise more such shows in the future, which would compliment the Auto Expo, which will be held in Janaury 2010.With regard to the JNNURM scheme, some of the State road corporations have started floating tenders for purchase of buses. Many more tenders are expected to open soon. JNNURM aims to convert cities into engines of economic growth, to encourage urban fast-track integrated development.
Addressing the inaugural session of the Bus and SPV Expo, Mr. Sudhir Mehta, Chairman, SIAM Committee for Trade Fairs, said that India is the second largest producer of buses after China, accounting for 16 per cent of the world production. If one excludes China, India would account for 30 per cent of the world’s bus production in 2007. The bus manufacturing capability in India has nearly doubled over the last eight years, with 75,000 buses produced in 2008 with a five-year average growth rate of 10 per cent. Large and small buses grew at 11 per cent and 9 per cent respectively over the last five years. The city-wide variation in bus penetration across India varies from as low as 0.4 to 6 buses per thousand people.
In terms of value, this industry is estimated to be over Rs. 7,500 crores and supports huge employment in the country – not only in bus chassis manufacturing but also down the line in body building, servicing and even drivers, conductors and cleaners. It already supports huge employment. The Automotive Mission Plan 2006-2016 of the Ministry of Heavy Industries & Public Enterprises has identified that in the next 10 years the automotive industry could support an additional 25 million employment if properly nurtured.
This industry has a strong backward (component, basic material) and forward linkages (insurance, financing, oil industry and roads). Each vehicle sold also generates manpower requirements for providing service support and drivers. Buses play a very important role in mobility of the general population. Even in cities, unless there is a strong public transport system, it becomes difficult to manage the huge private vehicles.
Buses are a vital mode of public transportation. State Road Transport Undertakings currently account for approximately 15 per cent of total bus fleet. In 2006-07, these undertakings carried 2,235 crore passengers covering 46,210 crore passenger km.
STUs in India had around 115,000 buses at the end of 2006-07, giving employment to 660,000 people. However, their share has been declining over the years. While in the earlier years the share of buses in the public sector was around 32 per cent, today it has declined to 15 per cent. Some of the reasons for drop in the share of the buses in the public sector have been unviable operation of road transport undertakings, inadequate fare structure in the States, lack of capital expenditure on acquiring buses, etc. Since 1991, the share has further deteriorated due to withdrawal of capital support from the Centre to STUs/STCs.
Production of large buses has been stagnating of late, at around 20,000 units, mainly because STUs were not able to replace buses because of lack of funds. However, in 2007 alone, the offtake increased substantially, to around 45,000 units. Though the number fell again to around 38,000 last year and to 32,000 this year, it is expected that with Government support, especially under the JNNURM scheme, the situation will improve a lot in 2009-10.
The following significant developments are worth noting: * In 2007-08, the number of buses bought by STUs or STCs was estimated at around 16,783 units.
* As per the CIRT data, the cancelled km of STUs/STCs in 2006-07 is stated to be around 6,000 lakh km because of poor ownership of buses by STUs and STCs.
* In Delhi alone, the cancelled km was more than 300 lakh km.
* Since 1991 and up till 2005, the number of buses in the public sector have increased from 1,06,100 to approximately 1,15,800, whereas in the same period private sector buses have grown in number from 2,25,000 to over 6,51,800.
Traffic planning and management in various cities in recent times have led to different types of experimentation, including BRT systems, and the industry is confident of addressing the specific problems of towns and cities appropriately.
JNNURM launchJNNURM was launched by the Prime Minister, Dr. Manmohan Singh, on December 3, 2005. A total of 343 projects were sanctioned. It envisages an investment of more than Rs. 1,00,000 crores with a committed Central Government share of Rs. 50,000 crores. The State Governments and urban local bodies will contribute Rs. 50,000 crores.
The mission is to be implemented in a time-frame of seven years (2005-2011). The objective is to ensure integrated development of urban infrastructure and services, secure effective linkages between asset creation and management and to ensure adequate investment of funds to address deficiencies in the urban infrastructure. It lays particular emphasis on providing basic services to the urban poor.
JNNURM has two components: Urban Infrastructure and Governance (UIG) for bigger cities and the Urban Infrastructure Development Scheme for small and medium towns that aims to encourage reforms and to fast-track planned development of identified areas with a focus on urban infrastructure.
The progress of municipal reforms is an important component of the mission which enables a city to claim additional funds under this scheme. In order to cope with the massive problems that have emerged as a result of rapid urban growth, it has become imperative to draw up a coherent urbanization policy/strategy to implement projects in select cities on a mission mode.
In its third year since inception, JNNURM is now progressing at an even pace. Under Urban Infrastructure and Governance (UIG) which focuses on 63 mission cities, 324 projects have been sanctioned covering 54 cities in 26 States and Union Territories in the country. The cost of these projects is estimated to be Rs. 30,135.23 crores.
JNNURM came in for appreciation from the then Finance Minister, Mr. P. Chidambaram, who proposed to increase the allocation of the mission from Rs. 5,482 crores in 2007-08 to Rs. 6,866 crores for 2008-09. The mission is seen as the main vehicle for improving urban infrastructure and has also succeeded in bringing about reforms in urban governance and urban-related laws.
