“We were already incurring losses, right now this Coronavirus has pushed us back further,” automobile businessman Bijendra Singh told Gaon Connection over the phone.
Bijendra Singh runs a factory that manufactures auto-gears in Jamshedpur, Jharkhand. The production was already on a decline when Coronavirus surfaced and further shook up the production of these factories. Like him, there are many others associated with the auto industry who are bearing the brunt of Coronavirus outbreak.
Goods from China have been banned due to Coronavirus. India imports 27 per cent of auto parts from China. These auto parts from China come via sea route, but the government of India has banned any import from China for the present time. This has further aggravated the slowdown in the automobile sector.
More than 80,866 people in China are suffering from Coronavirus, while the virus has affected more than one lakh people in the world. More than 6,000 people have lost their lives. Auto manufacturers around the world are looking for options to reduce their dependence on motor parts coming from China. But it is also very difficult to find new options in such a short time.
The Society of Indian Automobile Manufacturers (SIAM), an institution that monitors the purchase and sale of vehicles, has warned that if the situation lasts long, the Indian automobile sector will go down further. The more difficult it is to import auto parts, the more impact it will have on production.
In fact, it is a transition time for the Indian automobile market. BS-IV vehicles are being replaced by BS-VI trains. However, the suspended import of auto parts is affecting the spread of BS-VI vehicles in the Indian market. The production and market sales of electric vehicles are also being affected as most of their parts come from China.
Aman Sinha, managing director, Aman Electric Vehicles, which produces electric vehicles in the Delhi-NCR region, told Gaon Connection: “So far, the impact of Coronavirus was not visible, but gradually it has been begun surfacing now.”
He added: “Many parts of electric vehicles, including motor, controller, come from China. One month’s stock was with several other manufacturers, including us. But now gradually this stock is dwindling and beginning to worry the owners. Around 20-30 per cent production has been affected due to Coronavirus. This is pushing the prices of vehicles up. In addition, we had deposited our advance money with many Chinese companies. Our money has also been trapped due to import suspension. The price rise is also affecting the market sales. In this way, our money is also stuck in the market.”
Rajan Vadhera, chairman, SIAM, said: “Most of India’s automobile-making companies import 10 per cent of their raw materials from China. However, the disruption in the import of raw materials will affect the production of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, four-wheelers and electric vehicles.”
According to a report by Fitch Solutions, the production of auto vehicles in India is projected to be reduced by 8.3 per cent in 2020. The figure was up to 13.2 per cent in 2019. At the same time, an institution like Crisil says that many automobile companies had already sought automobile parts from China due to Chinese New Year. These parts will do for 30 to 60 days. But if the outbreak of coronavirus continues, the manufacturing of products will have a considerable impact.
However, large automobile companies like Maruti Suzuki, Tata, Mahindra have denied any effect of Coronavirus upon production. Maruti Suzuki chairman RC Bhargava issued a press and informed that there is nothing to panic about since their production was not yet affected due to coronavirus. At the same time, Hemant Sikka of Mahindra proclaimed the week to be better production-wise and hoped for the progress to continue.
Many experts believe that this is an opportunity for the Indian automobile industry to reduce its dependence on China through ‘Make in India’ initiative and increase the production of auto-parts. Brake-making companies have also reported in the past days that their production and sales have increased in the last few days.
Vinni Mehta, director general, Automotive Component Manufacturers Association of India, said: “We were very much dependent on China and other countries. But after the incident, it is hoped that our dependence will be reduced and the companies would produce parts at the local level.”
Sinha, MD of Aman Electric Vehicles said: “In the present crisis for the Indian automobile sector, there is a chance. If we get a little support from the government in the form of a little relaxation in tax and customs, the Indian automobile sector can also produce auto-parts and reduce their dependence.”
