Automobile sector growth to see 5 million new jobs in 3 years

India's emergence as a centre of manufacturing for international vehicle makers, which are adding huge capacities, will result in the hiring of five million new employees over three years, according to estimates collated by the country's apex automotive body.

This is the total of both, direct and indirect employment growth as a result of the expansion. Estimates put together by the Society of Indian Automobile Manufacturers (Siam) say this will be the extra added between now and 2012, to support the ever-increasing demand for new vehicles.

And, says Siam, a further seven million will be added in the period from 2012 to 2016, almost doubling the count to 25 million from the present 13 million; again, this comprises both direct and indirect employment. This would make the automotive sector one of the largest job generating sectors in India in the current decade.

Of the five million new jobs in the next three years, about 25 per cent will be for managerial functions, 60 per cent will be for skilled labour and the remaining lot will comprise unskilled labour.

The news comes after the industry had to resort to lay-offs a little over a year earlier, when lack of demand for new vehicles led to a severe drop in fresh orders for the component makers. Scores of small and medium enterprises were forced to shut shop and liquidate assets to pay off debts and salaries.

S Y Siddiqui, managing executive officer - administration (HR, Finance and IT), Maruti Suzuki, said: "The industry association strongly feels that all three segments in the auto industry — original equipment, suppliers and service providers — will be hiring in a big way in the next few years, as opposed to only OEMs doing the bulk of the hiring."

Nissan and Renault, Toyota Kirloskar Motors, Honda Siel Cars, Mahindra & Mahindra, Tata Motors, Maruti Suzuki, General Motors, Ford, Volkswagen and Mercedes-Benz are among several other large, medium and small component supplying companies making huge investments in setting up new production plants across the country.

Some of the planned investments, such as that of companies like Renault, Toyota and Honda, which were frozen in the year 2008 due to financial woes hitting the parent companies located overseas, will be resumed this year.

The robust growth in demand for new vehicles seen so far this financial year (till December), where cars and bikes reported an increase of 24 per cent and 22 per cent, respectively, is giving enough reasons for some engineers of Indian origin to return to India, leading to an inward flow of new talent and knowledge, according to Siam.

Dilip Chenoy, director general, Siam, said: "Many automobile manufacturers are on the speedy road to expansion now. Rural prosperity and improved infrastructure are major factors which have resulted in the growth of the auto industry."

Besides adding capacity, some companies are investing separately in vehicle design and technical centres which play a pivotal role in all research and development (R&D) activity. India has become the hub for developmental activities of new cars for not only Asia but established markets such as the US and Europe.