Tamil Nadu's auto manufacturing sector faces severe climate risks: CII

The risk assessment was carried out as part of CII's new framework, 'Building Climate Resilience for Indian Industry', which aims to help businesses identify and address climate-related threats

An assessment by the Confederation of Indian Industry (CII) reveals that Tamil Nadu’s automobile manufacturing sector is facing severe climate risks. The findings, obtained by Business Today, indicate that the state’s auto industry has limited capacity to adapt to the growing frequency and intensity of weather events, including floods, droughts, and cyclones.

The CII assessment, which also examined other key industrial sectors across India, identified three high-priority clusters: dairy and food processing in Maharashtra, iron and steel in Odisha, and automobile manufacturing in Tamil Nadu.

While the dairy and iron industries were found to have relatively better adaptive capacity, Tamil Nadu’s automobile sector has been marked as particularly vulnerable, due to its high exposure to climate hazards and limited preparedness to mitigate these risks.

The study was carried out as part of CII’s new framework, ‘Building Climate Resilience for Indian Industry’, which aims to help businesses identify and address climate-related threats. The framework considers factors such as exposure, sensitivity, and adaptive capacity, with the automobile sector flagged for its proximity to coastal areas and ports, increasing its exposure to extreme weather events.

Recommendations for greater resilience
 

To combat these challenges, the industry body has recommended both short-term and long-term strategies, including diversifying supply chains and reducing dependency on distant suppliers, particularly for electric vehicle components. The report also suggests more frequent evaluations of climate-related vulnerabilities in supply chains, as well as collaboration with the government to develop strategic reserves for essential minerals.

It further recommended assessing climate-related vulnerabilities within supply chains biannually, with a focus on raw materials and component suppliers. This should be done alongside the regular monitoring of geopolitical risks, as well as evaluating the financial stability and quality of suppliers. 

In the report’s foreword, CII President Sanjiv Puri stressed the importance of these actions, noting that businesses must urgently address climate risks to safeguard operations and future growth.