Since the demand fell due to economic uncertainty and tight credit, there was a fall by 3.2 percent in January in the sales of cars in India, which marked the sixth drop in seven months.

On Monday, data from the Society of Indian Automobile Manufacturers (SIAM) displayed that 110,212 units in the month were sold by car makers, down from 113,894 sold a year earlier.

Sugato Sen, senior director at SIAM, reported, "The auto industry was going, to a large extent, due to the easy availability of credit. But now banks have significantly cut their exposure to auto loans."

Financial institutions have been hesitant to lend for vehicle purchases, due to slowdown in Asia's third-largest economy that led to job and wage cuts.

Even though the central bank has reduced its important short-term lending rate to an 8-½ year low of 5.5 percent, loans have still remained relatively expensive.

Fitch said in its 2009 industry outlook said, "A recovery of the sector remains contingent upon improved credit availability as well as recovery of key demand drivers including GDP growth and the freight markets."

It is being expected by the government that economy will grow at 7.1 percent in the year to March, the slowest in six years, since domestic consumption moderates and exports would decrease as compared with 9 percent or more in the last three years.