The three main industry bodies in the auto sector — Automotive Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM) and Federation of Automobile Dealers Association (FADA) — on Friday, came together to seek government nod for re-starting of operations by the entire value chain, including vehicle manufacturers, component suppliers, dealers and service workshops, in unison.
In a joint submission to Home Secretary Ajay Bhalla, the industry bodies reasoned that a vehicle manufacturer cannot commence operations if any one of its suppliers is unable to undertake production.
Further, production for a vehicle manufacturer will only amount to adding to inventory, thus blocking working capital in case dealers are unable to sell vehicles.
“You would appreciate that the automotive value chain is highly complex, integrated and interdependent… It is therefore pertinent to note that, if any element in any segment does not commence operations, the value chain will not be able to restart,” the letter dated May 1, which is also marked to Heavy Industries Secretary Arun Goel, stated.
The industry associations also noted that the sector was losing ₹2,300 crore in revenue per day due to the halt in operations. “Considering the fragile health of the automotive industry, as also the economic contribution…request you to kindly allow the entire automotive change for opening up and re-commencing operations.”
This entire value chain includes the vehicle manufacturers, the component suppliers, the dealers, the service workshops and the regional transport authority. The auto bodies added that auto dealerships workshops will not be able to open till such time the citizens are not allowed to come out of their homes freely.
“The industry needs to be treated akin to ‘essential services’ and be allowed to function as has been done in case of Steel and cement sectors,” it said.
The industry also tried to allay concerns over the spread of COVID-19, assuring that a detailed SoP has been created which along with social distancing guidelines of the government will be adhered to “with utmost sincerity”.
“The automotive industry in India, which was already facing a severe downtown for over 15 months, with the lockdown is now confronted with total disruption of its entire value chain. With challenges of working capital across the sector, several players in the country, right from the component suppliers to dealerships, are faced with the challenges of staying solvent,” the letter said, adding that starting of economic activity in the sector is critical.