The Indian car industry which has recorded a negative growth for seven consecutive months till January 2009 has not received any sops from the interim budget. But according to the new budget, 50% of expenditure for research & development (R&D) will now be funded by government for major automobile companies whereas small firms will still get 100% financial assistance for R&D.
According to an official in the Department of Heavy Industry (DHI), “It has been decided that R&D projects of only small companies will get full financial support as they do not have sufficient resources. Bigger players such as Maruti, Hyundai, and Tata Motors do not lack resources.”
He further added, “The intention of the government is to help more automobile companies in upgrading technology. It will also encourage bigger players to take ownership in R&D projects. This will not only support R&D efforts of the auto industry but also ensure that more number of projects get financial assistance”.
It’s is known that so far the department has approved R&D projects worth Rs 500 Crore from the automotive cess fund.