10 lakh could lose jobs due to Auto industry slump
Auto industry has become a victim of recession, which has created a threat to the employment of about 10 lakh people in this sector. The Automotive Component Manufacturers Association of India (ACMA) said that if the auto sector’s recession continues for a long time, there will be no other way than layoffs. ACMA has interfered with the government in this matter and has demanded a uniform GST of 18 per cent for the entire auto sector.
Significantly, the auto sector has been facing a steady decline in sales in the last 10 months. According to the Business Standard, ACMA President Ram Venkataramani described the situation as “unprecedented” and said that the sales of vehicles have been declining for the last several months and this has severe repercussions in the component segment.
Auto parts or component industry can only flourish when the sales of vehicles continue to increase. But due to a steady decline in the sales of vehicles, auto companies have to cut their production by 15 to 20 per cent.
Venkataramani said that if this trend continues, companies will be forced to cut down and about one million jobs could be effected. He said that about 70 percent of the employees in the industry are on contract. So whenever demand decreases, the number of employees is reduced.
He said that due to lack of demand, the need for investment for change in BS IV to BS VI emission standard, the absence of fierce on the policy of electric vehicles etc., the auto industry is uncertain about its future and has stopped all future investment plans. He said that the government needs urgent intervention in this matter.
The government needs to put the entire auto and auto component sector in the 18 percent GST slab. Currently, about 70 percent of auto components are charged at 18 percent and 30 percent of the component at 28 percent GST.
The condition of the country’s auto sector is not improving. Sales of domestic passenger cars have continued to decline for the past several months. It also saw a huge decline of 24.07 percent in June. Not only that, sales of total vehicles have declined by more than 17 per cent.
According to experts tracking this sector, due to GST, the main reason for high costs, low demand and adequate cash reduction is the main reason. According to the Society of Indian Automobile Manufacturers (SIAM), passenger car sales in the domestic market have come down to 139,628 cars against 183,885 units sold during June 2018. Overall, passenger vehicle sales declined by 17.54 per cent to 225,732 units in June compared to 273,748 units in June.
