Auto Component Manufacturers Association (ACMA) had also requested the government for any policy or financial aids and the announcement comes as a big relief.
The Coronavirus crisis has taken a toll on the entire auto industry. For the first time in the history automakers have recorded zero monthly sales last month in the domestic market as all sales operations and production were stopped May 22 onwards when the Janta Curfew was implemented nationwide, followed by the lockdown. While automakers still have extended support to their dealer partners by means of immediate payment clearances and advance payments, component suppliers are the ones who have borne the worst brunt of the shutdown. The ₹ 20 lakh crore economic package announced by Prime Minister Narendra Modi accounts 10 per cent of the GDP. It includes Micro Small and Medium Enterprises (MSMEs) and over 80 per cent of auto component manufacturers come under MSMEs.
Also Read: Auto Component Makers Gearing up To Resume Operations
These component manufacturers have low cash or bank reserves to sustain their businesses during the lockdown and in-turn pay their employees. Auto Component Manufacturers Association (ACMA) had earlier requested the government for any policy or financial aid to the industry. Speaking on the new economic package, Deepak Jain, President- ACMA said, “Announcement of the ₹ 20 lakh crore economic package is indeed very welcome and is the need of the hour. This will bring much needed relief to several stressed sectors and industries, especially the MSMEs. A significant proportion of the industries in the auto component sector are MSMEs. ACMA is committed to making the Hon’ble Prime Minister’s Vision of self-reliance through localisation, global competitiveness, vibrant local manufacturing and a robust local supply chain a reality. Reforms in land, labour, liquidity and laws are critical to make India a driver of global economy.”
The move will also help the entire auto industry to regain momentum as the economic relief package will also have incentives for the middle class and lower middle class which is expected to help in boosting the demand in addition to strengthening the supply chain. Rajan Wadhera, President- SIAM said, “India has delivered in the fight against COVID 19 on the medical front. Now the promise of Rs 20 lakh Crore comprehensive economic package announced by the Hon’ble Prime Minister, focusing on Economic activities and an overall aim of a Self reliant India, will provide the right boost to demand and growth of our economy once again. Indian Automotive industry is a strong pillar of Make in India with huge contributions to GDP and employment and relies on its highly indiginised supply chain. We are hopeful that a focused package to support the Indian Automotive Industry would be announced by the Hon’ble Finance Minister, when she announces the details of the package”
Also Read: Coronavirus Lockdown: Automakers Extend Support To Component Suppliers In Resuming Operations
The auto component industry had already taken a severe hit last year due to the prolonged slowdown that lead to over a lakh of job losses and is afraid of any further job losses due to the lockdown. It’s not just a cog in the wheel but has a vital role in the entire supply chain. In fact, the whole supply chain in the auto industry has been disrupted after the nation was put under a lockdown and to get it in place and functioning is the need of the hour as automakers have resumed both production and sales. Some automakers who have already received huge bookings for some models before the lockdown have restarted operations with 20 – 30 per cent production capacity this month onwards and are waiting to hear from suppliers on them resuming operations.