RIP 2020 INDIAN AUTO INDUSTRY

The Indian Auto Industry has today grown to become a very significant industry in India, contributing almost 10 percent towards the country’s GDP. According to a KPMG report, while the automobile industry contributes around 7.1 percent towards the GDP, the auto components industry contributes around 2.3 percent. With major auto clusters in Chakan (Maharashtra), Oragadam (Tamil Nadu), Sanand (Gujarat), and the National Capital Region (NCR), the Indian auto industry largely exports to markets in Africa, Asia, Bangladesh, Mexico, and the US. As for its key imports, the Indian auto industry sources critical components from China, Germany, South Korea, Japan, and Thailand.

- ROY P. THARYAN

The Indian auto industry, however, did not have a great 2019. Sales declined month after month, though there were several glimmers of hope when it came to certain products and segments within the auto industry. But still, in spite of the gloom, companies were devising strategies to keep their bottom lines intact and their turnovers decent. In 2019, nobody had any clue of a virus that went by the name of COVID-19.

There were several reasons for a bad performance for the Indian auto industry. The country’s GDP growth was at a six-year low, with the manufacturing and construction sector struggling. There were no GST benefits on IC engine vehicles. Because of the erratic rains and changing weather patterns, substantial Rabi crops were damaged resulting in low rural sentiments. One of the biggest challenges for the industry was also to move from BS-IV emission norms to BS-VI emission norms from April 1, 2020, skipping the BS V level completely.

Despite the several impediments, the industry did manage to move to BS-VI levels and as Rajan Wadhera, President SIAM stated in April 2020, “It is unprecedented anywhere in the world to switch to such stringent emission regime on one single day, for all categories of vehicles including, Two-Wheelers, Three-Wheelers, Passenger Vehicles, Trucks and Buses. I do compliment my fellow industry colleagues for this outstanding achievement in meeting BS-VI emission norms despite facing huge challenges of technology, time, and resources.”

THE DE-GROWTH STARTED IN 2019