Covid 19 pandemic impact on Indian Automobile industry

                             

Past Performance of Automobile Sector:

Automobile sector in India has seen good growth in the past. The country like India where future of Automobile companies are very bright. Let us discuss in brief about the past developments of Indian automobile sector.  Since 1991 to 1993, lot development came into the Indian automobile industry like introduction of new automobile policy & implemented it comfortably in 1993. 100 % foreign direct investment had also given boost to this sector. Indian automobile sector contributed into the Indian economy & GDP at higher level.  This sector also generated lot of employment opportunities in India. Big brands or well known companies like Maruti Suzuki, Tata Motors, Ashoka Leyland, Bajaj Autos made presence of Indian Automobile in the overseas. As per the recent past data, Indian automobile ranked 6^th in the world for production of Automobiles which was nearly 28 million vehicles and in the export front 4 million in the years of 2017-18. In this growth of Automobile Industry in India, Government also played a vital role because government introduced new fiscal policy &Industrial policy which had shaped the development of technology as well as given direction to the fast process. In 2016 the Employment generation part, Indian automobile sector contributed nearly 7 percent to the Indian GDP & approximately more than 30 million jobs were generated in India.  Two wheeler Industry had shown robust growth. In the very next year 2017, Indian government introduced Goods service tax GST & norms for BS6 emission which was effective till April 2020. This was a hit for the Automobile sector.

Impact of Covid 19 pandemic on Indian Automobile Industry:

The pandemic brought many troubles into the Indian Industry.  The lockdown had announced in India, as a result whole production process suspended. It was a biggest loss for the India Industry. During this lock down period, skilled labour were going back to their native places because everyone was scaring from this pandemic & there was no any Idea that when that lockdown will be lifted. It was a panic situation in India as well as in all over the world. The impact of this lockdown was not limited to the large scale Industries but it had more impact on Small & medium size industries like auto spare parts manufacturing companies as well as logistic companies. It was understood that if there will be no sale of the automobiles then demand for the auto ancillary will be less. This was a situation of crisis in the Automobile sector.

As a result of this lockdown, the growth of Indian automobile sector came to the lower level. As per the data published by Society of Indian automobile manufactures the growth declined to nearly 13 percent in the two wheeler segment & approximately 3 % in four wheeler passenger vehicle segments. Later on as per the Parliamentary reports more than 3 lakh jobs loss were estimated in the Indian automobile sector. The India biggest car manufacturer company Maruti Suzuki reported significant drop in the car sales segment and also announced employment cut by more than 5% on temporary basis. As per media reports Indian automobile industry faced loss of more than 2200 crore on the daily basis.  As per the experts of automobile Industry that coming two years are going to be very challenging for automobile companies , low capacity utilization, less CAPAX investment & high risk of bankruptcy & less job creation into the Indian automobile sector. MSME segment is under deep trouble.

 After the first wave of Corona, when Industry was trying to overcome from this major losses then Second wave of covid also impacted to Automobile sector but till then Industries and employees of the Companies has understood that they have to make social distances on their work places to face this pandemic situation and also maintain hygienic environment in the working places. Companies had also played important role in this situation. Companies managements established vaccination drives into their premises with the help of the government well as followed the rules. This step had given confidence to all workers as well as employees those came back onsite for work.

If we will analysis this pandemic then we will find that people understood that maintaining a social distances & wearing a mask with the use of had sanitizer is a best solution if they want to come back onsite work. The less use of the public transport had also given some hopes to the Automobile sector because people will like to buy their own vehicle. In the tractor segment, Government has also announced some benefits for buying farming equipments as well as for buying new tractors. Tractor manufacturing companies got many tax benefits.

But due to uncertain condition of corona virus or we can say that with the changes of variants of corona virus, the situation is still worried because many medical experts are expected Third wave of corona in coming few months. But the vaccination drive in India is on right track and people are more aware at this time. We all should be thankful to the Indian medical association, doctor’s nurses, medical staff, pharmacists, ambulance drivers and all hospital working staff members those saved the life of corona patients.

In nutshell, we can stay that Indian automobile is facing tough time due to Covid 19 pandemic. It is not only in India but also in the other countries of the world. But we should expect some improvement in the Indian automobile sector because good number of vaccination rate in India and in other countries of the world will reopen the export & Import business level at Pre covid levels. This opening will give support to the logistic sector which play very important role in the automobile sector. IF we will see improvement in the commercial vehicles then it will indicate the recovery of automobile sector because commercial vehicle play vital role in transporting the products from one manufacturing unit to other manufacturing unit. Also reopening of the industry is giving some hopes that source of income of the middle class and upper middle class people will increase and this will lead to increase the sale of passenger vehicles. Good monsoon is also giving best hopes to two wheeler segment companies because demand from the rural areas will be increased if source of income will increase. With all these hopes we can say that Indian automobile sector will show some recovery in the coming months.

Also read: Covid 19 Impact on Indian Aviation sector