A million contractual manufacturing jobs are at risk in the automobile sector due to the consumption slowdown, as per Rajan Wadhera, President of the Society of Indian Automobile Manufacturers (SIAM).
Speaking at the SIAM annual convention, Wadhera said, "Till now, 15,000 contractual manufacturing jobs have been lost and another million are at the risk if the slowdown is not reversed."
The slowdown has forced the value-chain operators across the automobile industry to reduce production and downsize the workforce. The automobile industry has been hit hard due to slowdown, brought about by several factors, like high GST rates, farm distress, stagnant wages, and liquidity constraints. The industry has witnessed around 200,000 job losses. A similar number is expected to have lost jobs in the ancillary industries.
To this effect, Wadhera reiterated the demand for lowering of GST on automobiles from 28 percent to 18 percent and highlighted the need for a single nodal regulatory ministry for the industry.
As per Wadhera, the automotive industry accounts for almost 50 percent of manufacturing gross domestic product (GDP), 15 percent of goods and services tax (GST) and employees 37 million people directly and indirectly. It is no news that the industry is facing one of its biggest slumps this year, forcing even market leaders like Maruti Suzuki to reduce its temporary workforce by 6% this year and trim production.
While the government is giving positive signals that it might reduce the goods and services tax rate on automobiles and consider reducing taxes on hybrid vehicles to boost sales, it seems imminent that if the industry does not turn back to positive growth for the remaining part of the months of fiscal year, more layoffs could be in the offing.