Job Cuts, Spiraling Sales Does Not Bode Well For India’s Automobile Industry

India Inc had reacted cautiously to Reliance Industries chairman Mukesh Ambani selling a stake in the core assets of its oil business to Saudi Aramco in order to mop up its debt within 18 months. However, being a farsighted individual he was able to get his business in order considering the low liquidity concerns.

In this context, one wishes the automotive industry, and especially big players like M&M, Bajaj, and Maruti, etc, also learn a thing or two.

Our Indian economy traditionally comprises three sectors, with the manufacturing sector being the backbone and employing a huge workforce of blue-collared and white-collared personnel. However, for the past three decades, this sector has seen complete stagnancy. The automotive sector which forms an integral part of manufacturing has witnessed spiralling sales and increased inventories. The sector has lost 2.30 lakh jobs with the industry failing and witnessing its worst crisis in 20 years.

The global and national environment has also contributed to an extent, with an uneven monsoon, drought in important manufacturing hubs like Chennai, trade wars between China and USA, banks inability to lend due to the IL&FS meltdown has made the sector bleak.

The Indian economy was always considered to be prudent and its fundamentals strong. This helped India survive the 2008 global meltdown after the Lehman brother’s fall. However policymakers did not gauge the fallout repercussions, banks continued to give loans which helped create liquidity and purchasing power, therefore fuelling economic growth. A decade hence, the RBI has cut growth rate from 7 percent to 6.9 percent. Moreover, the swiftness to introduce Goods and Services Tax (GST) and demonisation has also affected our economy and its ‘fundamentals’.

However, the automotive industry also remains upbeat about the monsoon improvement, a supposed fiscal stimulus package by government, and has also asked the government to cut GST rates on their sector from the present 28 percent.

Challenges to the sector, however, remain in plenty. The government has already notified the new Bharat Stage (BS) norms from BS-IV to BS-VI, therefore, bypassing the BS-V. The government’s faster adoption of electric vehicles, its newer safety mechanism in vehicles, therefore, increasing costs. Added to that the low liquidity in the part of the banks making it competitive to take loans, unlike a decade back, have resulted in the shortfall by 18 percent of car sales for 2019 in July.

Automotive industry and their ancillary need to understand the fast pace of the economy and its movement rather than waiting for the government to bring norms and parameters, they should take a clue from the richest Indian and also think far-sighted.

Featured Image Credit: Reuters
Featured Image For Representation Only
Similar Posts

Share your details to download the report.

We promise not to spam or send irrelevant information.

A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

Sign up for the Youth Ki Awaaz Prime Ministerial Brief below