Auto Component Sector May Lose 50% Jobs Over Next Decade, Industry Body Says
Automation in manufacturing units, and advanced machinery would hit unskilled labour.
The automotive ancillary industry in India may lose half the jobs over the next decade amid automation and a push for electric vehicles, according to the Automotive Component Manufacturers Association.
The process of automation in manufacturing facilities and the dependence on advanced machinery is likely to render the unskilled workforce jobless in the years to come, Rattan Kapur, president of the lobby group told BloombergQuint on Thursday. The industry employs nearly 3 million people, both directly and indirectly, according to the association.
We will have to look at other ways of employment or skilling them in order to get them work ready.Rattan Kapur, President, ACMA
Despite Prime Minister Narendra Modi’s ‘Make in India’ push, job growth has not taken off with unemployment rising to 5 percent during 2015-16, compared with 4.9 percent in 2013-14, according to data available with the labour ministry.
Quarterly surveys by the ministry of labour and employment revealed that only 1.35 lakh additional jobs were created in 2015, down from 9.30 lakh in 2011. Given that nearly 1.2 crore people get added to the workforce every year, jobs are available for 1 percent of that.
Kapur said the government support was crucial to skill the workforce to help them adapt to the rapidly rising technological curve. The new workforce should be skilled to operate advanced machinery as the use of hand tools was is becoming redundant, said Kapur.
The government’s push to make all cars electric by 2030 will also impact the auto parts industry, said Kapur. A complete shift may not be possible by then, said Kapur.
To promote electric cars, the government has kept the vehicles in the 12 percent tax bracket under the Goods and Services Tax as against 28 percent for most other categories, including hybrid cars, that attract an additional cess.
Kapur said the government should take a staggered approach towards its all-electric target. “We would have preferred a step-by-step approach, from conventional fuel, to hybrid, to fully electric.”
Exports To Remain Low
Meanwhile, the automotive component industry in India registered a 14 percent year-on-year growth in turnover during 2016-17, ACMA said in a report. Kapur said the next three financial years, including the ongoing, are likely to see growth between 10 percent and 12 percent on a year-on-year basis.
Exports is likely to remain low, following a 3.1 percent year-on-year rise in 2016-17, on account of added focus on the Indian market, said Kapur. India is set to move to Bharat Stage-VI emission norms from April 1, 2020, which has made the component industry pump in investments for research and development activities.
The industry is expecting support from the government in light of investments being made, said Kapur, referring to changes in tax rates on vehicles over the past three months.
Once we have come out with a policy, it should last for at least a year to see how the industry reacts to this and to understand the problems in it, and then we should go to the next level after discussion.Rattan Kapur, President, ACMA
The government implemented GST across the country from July 1, changing tax slabs on vehicles, and on Wednesday announced an enabling provision to raise cess up to 25 percent from the present 15 percent on mid-segment cars, large cars, and sport utility vehicles.
Kapur said automakers had committed investments to introduce SUVs post implementation of GST, but would now be forced to have a rethink on the same.
