Auto component manufacturers in India, who are reeling under stress as a result of slowdown in the automobile industry, on Wednesday warned that 10 lakh people could lose their jobs if immediate steps are not taken to stir up vehicle demand in the country.
“The automotive industry is facing an unprecedented slowdown. Vehicle sales in all segments have continued to plummet for the last several months.
“Considering the auto components industry grows on the back of the vehicle industry, a current 15-20% cut in vehicle production has led to a crisis-like situation in the auto components sector. If the trend continues, an estimated 10 lakh people could be laid off,” Ram Venkataramani, president, Auto Component Manufacturers Association (ACMA) of India, said.
The auto components industry, which pitched for a reduction in GST rate to a uniform level of 18% for the entire auto industry to stimulate demand, employs about 50 lakh people.
“The industry needs urgent government intervention. There is an immediate need to stimulate vehicle demand and also sustain it post BS-VI implementation, as vehicles will become significantly expensive thereafter. We strongly recommend that the government implement 18% GST rate across the entire auto and auto component sector,” Mr. Venkataramani added.
The industry also sought a stable policy for electric mobility. “Any further changes in targets for roll-out of electric vehicles would increase India’s import bill and damage the current robust auto components manufacturing ecosystem. This will also result in significant job losses.
“Therefore, a stable, technology agnostic, e-mobility policy is the need of the hour to ensure a smooth transition and creation of a strong local supply base.”
‘Unsure of future’
In a statement, the association added, “The subdued demand, recent investments made for transition from BS-IV to BS-VI, lack of a clarity on policy for electrification of vehicles, especially for two- and three-wheelers, has left the industry unsure of its future and has caused it to stop all future investments.”
Data from ACMA shows that the automotive component industry’s turnover stood at ₹3.95 lakh crore for 2018-19, a growth of 14.5% over 2017-18. Vinnie Mehta, director general, ACMA, said, “The first-half of 2018-19 witnessed robustgrowth; however the second-half saw a significant slump in vehicle sales. The component industry, in tandem, posted a some-what subdued performance.”