India asks auto industry to optimise output as Iran conflict hits supplies

India has asked automakers and parts suppliers to tighten production schedules to conserve fuel amid ​fears of shortages caused by disrupted oil and gas ​imports from the Gulf due to the Iran war, a ‌government memo seen by Reuters shows.

The heavy industries ministry has also urged companies to shift factory operations from oil-based fuels to electricity and to use recycled aluminium or alternative materials as shortages and costs rise, according to the March 25 advisory.

For India, one of the world's largest oil and gas importers, the advisory underscores the government's mounting concern over the conflict and its disruption to energy flows, supply chains and availability of raw materials.

 

India's ministry of heavy industries did ‌not immediately respond to a request for comment.

The government has already prioritised use of gas for households over industries, which get only about 80 per cent of their average needs.

Some parts suppliers to India's leading carmakers like Maruti Suzuki, Tata Motors and Mahindra are already reporting a shortage of gas to power operations at a time when vehicle sales are booming.

The ​ministry wants the sector to do more.

"Wherever technically feasible, a transition from oil-based fuels ‌to electricity may be considered. Further, production schedules may be optimised to minimise idle and standby fuel consumption," the ministry said in ​its ‌note.

The government wants companies to use recycled aluminium where possible and explore the ‌use of alternative materials for packaging and other non-critical applications to reduce "demand pressure" amid shortages which are already affecting beer makers.

"I don't know ‌how ​much we can ​change in the factory, but the takeaway is that this war is going to go on for a long time and ‌we should be ​prepared," said an executive at an Indian carmaker.