Auto Associations To MHA: Treat Us As 'Essential Service'; Permit Entire Automotive Value Chain

For the first time ever, three apex Chambers representing the complete automotive value chain of the industry - Society of Indian Auto Manufacturers (SIAM), Automotive Component Manufacturers Association (ACMA) and Federation of Automotive Dealers Association(FADA) - have appealed to the Ministry of Home Affairs for permitting the entire Automotive value chain to open up and re-commencing operations. This would include the Vehicle manufacturers (OEMs), the component suppliers, the dealers, the service workshops, and the Regional Transport Authorities.

The automotive industry in India is a key driver of its economic engine. With $120 billion in turnover, the sector contributes 7 per cent to India's GDP, 49 per cent to the manufacturing output and creates employment for over 3.7 crore people, directly and indirectly. The sector also exports $27 billion worth of vehicles and components annually.

The automotive industry in India, which was already facing a severe downturn for over 15 months, with the lockdown, is now confronted with total disruption of its entire value chain. With challenges of working capital across the sector, several of the players in the industry, right from the component suppliers to the dealerships, are faced with the challenge of staying solvent. The sector is losing revenue to the tune of Rs 2,300 crore per day.

A few manufacturers with plants in the “Green” zones have been given permission to start manufacturing in a limited capacity but manufacturers are yet to start. ‘A vehicle manufacturer cannot commence operations if any one of its suppliers is unable to undertake production. Further, production for a vehicle manufacturer would only amount to adding to inventory and thus blocking working capital in case dealers are unable to sell vehicles.’ Says SIAM, ACMA & FADA in a joint statement. The Automotive Apex Chambers appeal to the Home Ministry - ‘It is therefore pertinent to note that, if any element, in any segment does not commence operations, the value chain will not be able to re-start.’

The Apex bodies have also assured the Government that the entire industry, has created detailed safety SoPs and these together with social distancing norms as prescribed by the government, will be adhered to with utmost sincerity.

The Auto industry is demanding to be treated akin to 'essential services' and be allowed to function as has been done in case of Steel and Cement sectors.