Auto component industry faces shortage of skilled labour: Industry leader

Sector employs around 5 million people and it accounts for 2.5 per cent of country's GDP

The shortage of skilled labour is hurting production at India’s auto component firms as demand shows signs of recovery, said an industry leader on Wednesday.

The shortage is the fallout of migration of labour from big cities to towns during the lockdown to contain the coronavirus pandemic, said Deepak Jain, president Auto Component Manufacturers Association at a webinar on performance of auto component industry.

The auto component industry employs around 5 million people and it accounts for 2.5 per cent of country's GDP; 25 per cent of its manufacturing GDP and 4 per cent of exports. Jain said productivity has taken a hit due to social distancing norms but the bigger concern is labour shortage.

“We are still struggling to get more labour-skilled manpower to be precise. The recovery has been much faster than what we anticipated," said Jain, adding that the supply chain is not able to address even a muted demand. 

Jain’s comments come amid auto companies' concerns about supply chain bottlenecks and localised lockdowns. Ahead of the festive season that kicks in with Ganesh Chaturthi on Friday and Onam next month, automakers have aggressive plans to undertake steep ramp up of production.

Cumulative revenue at the auto component firms dropped to a three-year low in fiscal 2020 with overall revenues declining by 11.7 per cent to $49.2 billion (Rs 349,637 crore) against $57.1 billion (Rs 395,902 crore) in 2018-19.

The decline was led by the protracted slowdown seen by the automakers. Auto sales slumped 18 percent during the fiscal as a slowing economy and slew of regulations added to the acquisition costs and weighed on consumer sentiments.

The industry’s performance is expected to return to the pre-coronavirus levels by the festive season should the ramp-up be not stymied by lockdowns in manufacturing zones and lack of availability of manpower, said Jain.

Going forward, to allow for uninterrupted production in the automotive value chain, despite local lockdowns, ACMA has recommended to the Government to accord ‘continuous production industry’ status to the automotive industry”.

• Industry’s revenue drops 11.7% to $49.27 billion in FY20
• Turnover of automotive aftermarket drops 3% 
• Exports decline 3.2%, first drop after 6 years of growth
• Imports decline 11.4%