Promoters Prioritize Personal Wealth Over Company Growth, Hurting Manufacturing: RC Bhargava

Koushik Roy

Promoters Prioritize Personal Wealth Over Company Growth, Hurting Manufacturing: RC Bhargava

RC Bhargava’s Call for Increased Investment in Indian Manufacturing

RC Bhargava, the Executive Chairman of Maruti Suzuki and a key figure in the Indian manufacturing sector, has recently expressed his concerns regarding the lack of investment enthusiasm among company promoters. In a candid conversation with CNBC-TV18, he emphasized the need for promoters to redirect their focus from personal wealth accumulation to nurturing the growth of their companies, which he believes is crucial for the overall advancement of the manufacturing ecosystem in India.

Promoters and Their Role in Manufacturing Growth

Bharagava pointed out that many promoters prioritize personal wealth creation over the strategic development of their companies. “They are more concerned about acquiring assets, improving their quality of life, and investing in luxury items like houses and airplanes,” he stated. He urged these leaders to reinvest profits back into their businesses to foster growth and innovation, which, in turn, will enhance the manufacturing landscape of the nation.

Reflection on the Make in India Programme

   

During his discussion, Bhargava hailed the government’s policies over the past decade, which, he stated, have significantly transformed the manufacturing sector. He noted that the Make in India initiative, now marking ten years, has instilled a sense of confidence and motivation among private sector players to expand their operations. “The government has laid the groundwork through effective reforms; now it’s the private sector’s turn to utilize this foundation for growth,” he remarked, encouraging entrepreneurs to capitalize on the favorable environment created by the government.

Growth Potential of the Automobile Sector

According to Bhargava, while certain sectors witnessed commendable growth, others are struggling. Maruti Suzuki, for example, is well-positioned to benefit from the government’s reform initiatives, with projections indicating that the company’s exports could triple in the coming years. However, he cautioned that the overall auto industry may face a challenging period with predicted low single-digit growth in FY25, ultimately reflecting cyclical issues rather than long-term declines.

The Need for a Rational GST Structure

One of the pressing concerns from the automobile sector has been the rationalization of the Goods and Services Tax (GST). Bhargava has advocated for a simplified GST framework, particularly emphasizing the need for reduced taxes on CNG and hybrid vehicles. He mentioned that high taxation, including road taxes imposed by various states, has contributed to escalating car prices, dampening consumer demand. The recent decision by the Uttar Pradesh government to waive road tax on hybrid vehicles, according to him, has already shown positive effects by boosting sales.

Looking Ahead: Challenges and Opportunities

As the Indian automobile sector grapples with slowing demand, Bhargava remains optimistic about its future potential. He believes that while the sector may only see modest growth in the short term, the long-term outlook is promising, with additional growth expected as industry players adapt and innovate in response to market demands and governmental support.

Conclusion

RC Bhargava’s insights highlight a critical moment for India’s manufacturing sector, urging promoters to prioritize corporate growth over personal gains. With the government paving the way through reform, the focus now shifts to the private sector to harness this momentum for building a robust manufacturing ecosystem.