Automotive industry lobbies with the home secretary for a comprehensive restart, requests for essential services tag

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Mumbai: Automotive lobby groups wrote to the home secretary on Friday requesting essential services tag for the sector and the permission to comprehensively recommence operations across the entire value chain citing operational issues posed by a staggered approach.

Three lobby groups representing the automotive components makers, automobile manufacturers, and retailers in a joint letter said that the entire industry had created detailed safety protocols to allay any concerns regarding the spread of Covid-19.

The automotive value chain was highly complex, integrated and interdependent, the letter read. “A vehicle manufacturer cannot commence operations if any one of its suppliers is unable to undertake production. Further, production for a vehicle manufacturer would only amount to adding to inventory and thus blocking working capital in case dealers are unable to sell vehicles. It is therefore pertinent to note that, if any element, in any segment does not commence operations, the value chain will not be able to re-start.”

This value chain includes vehicle manufacturers (OEMs), the component suppliers, the dealers, the service workshops, and the regional transport authorities that register new vehicles.

The letter was written by the Automotive Component Manufacturers Association of India (ACMA), the Society of Indian Automobile Manufacturers (SIAM) and the Federation of Automobile Dealers Associations (FADA).

The automotive industry in India was going through a severe demand downturn for over 15 months preceding the lockdown. With the outbreak of the Covid-19 pandemic, the industry was now confronted with total disruption of its entire value chain with challenges of working capital across the sector, the lobby bodies said. Several of the players in the industry, right from the component suppliers to the dealerships, were finding it difficult to stay solvent.

The sector was losing revenue to the tune of Rs 2,300 crore every day during the period of movement restrictions.

“Starting of economic activity in the sector is therefore critical and the only hope to infuse life back into this once vibrant industry,” as per the joint statement.

The automotive industry in India has an annual revenue of $120 billion, or about 7% of India’s GDP. It accounts for half of the country’s manufacturing output and employs over 3.7 crore people directly and indirectly. Annual automotive exports amount to $27 billion.



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