Auto component industry fears loss of 10 lakh jobs

New Delhi: Industry body ACMA on Wednesday said around 10 lakh jobs could be on the line if the prolonged slowdown in the automobile industry continues, while seeking immediate government intervention such as slashing GST to stimulate demand.

The Automotive Component Manufacturers Association of India (ACMA), which represents the auto component industry that alone employs around 50 lakh people, sought a uniform GST of 18 per cent for the entire automobile sector in order to revive the vertical which has now witnessed 10 months of continuous decline in sales.

Terming the situation as "unprecedented", ACMA President Ram Venkataramani said vehicle sales in all segments have continued to plummet for the last several months thus impacting the component segment as well.

"Considering the fact that the auto component industry grows on the back of the vehicle industry, a current 15-20 per cent cut in vehicle production has led to a crisis-like situation," he said, adding "if the trend continues, the layoffs are inevitable and an estimated 10 lakh people could be laid off".

When asked if layoffs have started, Venkataramani replied in the affirmative.

"In the components industry, nearly 70 per cent of the workforce is contract workers. So, whenever there is demand slump, there is reduction in workers," he said.

Subdued demand, recent investments made for transition from BS IV to BS VI emission norms, lack of clarity on electric vehicle (EV) policy has left the industry unsure of its future and has caused it to stop all future investments, he added.

"The industry needs urgent government intervention... We strongly recommend that the government bring 18 per cent GST rate across the entire auto and auto component sector," he added.

Under the GST regime, already around 70 per cent of auto components have come under the 18 per cent GST slab. However, around 30 per cent remain in the 28 per cent bracket. Besides, automobiles currently attract GST rate of 28 per cent with additional cess ranging from 1 per cent to 15 per cent, depending on the length, engine size and type.

He also sought for a long term clarity on government's electrification policy while pitching for technology agnostic approach to deal with issues like air pollution and crude oil imports.