New Delhi: India’s auto sector is facing a massive job crisis as car and motorcycle sales continue to drop. According to multiple sources, the slump in auto sales has forced manufacturers to reduce shifts, axe jobs, and even shut down entire factories. Reuters has reported that sources within the auto industry estimate that over 350,000 workers have been laid off by auto dealers and manufacturers since April.
Out of 350,000 workers, 100,000 job cuts have come from manufacturers of auto components. The remaining job losses have reportedly come from auto dealers, many of whom have permanently closed down. An investigation by Reuters has revealed that nearly five auto companies are going to cut jobs from their temporary labour force. Industry executives claim that the recession is one of the worst ones that the Indian auto industry has had to endure.
Amidst climbing unemployment figures across India, the Modi government will have to tackle challenges posed by the auto downturn as well.
Auto executives and officials from India’s finance ministry are scheduled to have a meeting on Wednesday. The executives believe that better financial accessibility among dealers and consumers, along with tax cuts, can help revive the industry. Automotive Component Manufacturers Association of India (ACMA) Director General Vinnie Mehta insists that the auto industry is currently undergoing a “recessionary phase”.
According to Reuters, Yamaha Motor has laid off 1,700 temporary workers while 800 jobs have been cut at Suzuki Motor Corp and Denso Corp. The slowing demand has also caused Indian manufacturers Tata Motors and Mahindra & Mahindra to suspend production for brief periods of time.
Since the auto-sector makes up 7 per cent of India’s GDP, the potential fallout can be catastrophic for India. The jobs of 35 million people employed directly or indirectly by the auto industry may be at risk. In addition, the Centre for Monitoring Indian Economy (CMIE) has estimated India’s current unemployment rate at 7.55 per cent, a significant rise from last year’s rate of 5.66 per cent.
