Auto industry slump: Ludhiana auto parts industry sees 30% reduction in demand
The nationwide slump in auto industry has hit Ludhiana hard as auto parts manufacturers are currently ruing their losses owing to a decreased demand in orders from automobile giants.
Ludhiana is a major source of ancillary units for the Indian auto industry. Manufacturers are in a tight position as they fear they will be forced to shunt labour in time to come, if the situation fails to improve. Ludhiana supplies auto parts and components to Tata Motors, Mahindra, Mercedez and others big-wigs, who have slashed orders for auto parts from the city.
While many industrial units in Ludhiana have stopped third shifts, others have announced that there will be no overtime allowance for workers. With a turnover of ₹10,000 crore annually, Ludhiana’s auto parts industry has a workforce of 30,000.
“The situation is bad. The question now is whether to retain our labour or let them go. There is no clarity. The future is blurred, so we can’t even plan ahead. We are currently juggling various parameters and have reduced working hours. Labour is not doing overtime. The demand from some of the major brands in the auto industry is down by as much as 80%,” said Sandeep Riat, whose company Akal Springs is a supplier of truck suspensions and spare parts to leading truck manufacturers in Jamshedpur and Lucknow.
“The demand for auto parts from Ludhiana has gone down by as much as 30%. As a result, supply is hit and the profits are turning into losses. Labour is not being shunted because we feel that once labour leaves Punjab, it will be difficult to get them again,” says Badish Jindal, president of the Federation of Punjab Small Industries Association (FOPSIA).
Jindal said the two-part power tariff policy of Punjab government was adding to their woes as irrespective of supply, the manufacturers are forced to pay fixed charges on power.
‘FINANCE MINISTER’S FRIDAY ANNOUNCEMENTS NOT CONVINCING’
The auto parts manufacturers said that the announcements made by finance minister Nirmala Sitharaman on Friday evening may give some hope, but they were not convincing enough.
“For auto sector, not much has been announced. If the government does not take immediate measures, the situation will worsen around Diwali,” said Upkaar Singh Ahuja, chairman, Chamber of Industrial and Commercial Undertakings, Ludhiana.
“The government failed to decrease GST on auto parts from 28% to 18%. The finance minister’s statement about clearance of delayed GST refunds shows that online automatic GST refund system is not working properly,” said Jindal.