Sluggishness in Auto Component Industry is a Threat to One million Employment

In the current phase, the Indian auto component industry is witnessing a slowdown which can result in a heavy cut in employment. Considering this situation the Industry organization suggested that if the same situation persists, there are high chances of people losing their jobs in the auto industry in the coming days. However, as of now, the industry organization did not take any step towards laying off jobs.

According to a top official of the Automotive Component Manufacturers Association of India (ACMA), about 10 lakh people could get unemployed in the coming days if this market’s sluggish situation continues.

ACMA President Ram Venkataramani further said that most auto components maker firms have opted for a reduction in working days to overcome this sluggish situation. Still, layoffs are happening at a very low scale because the manufacturers know how hard is to meet trained employees again.

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According to him, it is an unprecedented crisis in the automotive industry. It is happening due to vehicle manufacturers have cut down production by 15-20 per cent which results in a crisis for the auto component sector.

As per facts, the automotive component industry contributes 2.3 per cent in the country’s gross domestic product (GDP) while it has a 25 per cent market share in manufacturing GDP along with employment to 5 million people in the sector.

If sales of the industry are considered, as compared to the sales of 3.95 lakh crore (14.5 % hike on Y-o-Y basis) during the last financial year, the current sale is almost flat in the running fiscal.

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In April 2020, the auto industry is set to switch to BS-VI emission norms for which the manufacturers are upgrading their vehicles to comply with the upcoming emission norms as standard. Consequently, heavy investment is made by the industrialists. therefore, a drop in sales would have a huge impact on employment. Other than this, a fixed 18 per cent rate of Goods and Services Tax (GST) was requested by the ACMA for the vehicle sector.