Indian Auto Industry Faces Worst Downturn, Over 350,000 Laid Off But Nobody Is Talking About Creating Jobs

For a country already reeling under an economic down-slide and lack of new employment opportunities, slumping sales of cars and motorcycles are a new reason to worry as they are triggering massive job cuts in the auto sector.

News agency Reuters reported that many companies are forced to shut down factories for days and axe shifts. The cull has been so extensive, according to the Reuters report, that just the initial estimates suggest that automakers, parts manufacturers and dealers have laid off about 3,50,000 workers since April.

Within this previously unreported figure, car and motorcycle makers have laid off 15,000 and component manufacturers 1,00,000, with the remaining job losses at dealers, many of which have closed, according to sources quoted by the news agency.

Reuters was able to identify at least five companies that have recently cut or plan to cut hundreds of jobs, mainly from their temporary labour force.

The downturn - regarded by industry executives as the worst suffered by the auto industry - is posing a big challenge for Prime Minister Narendra Modi's government.

To revive the sector, auto executives plan to demand tax cuts and easier access to financing for both dealers and consumers.

The industry's plight was highlighted by the Automotive Component Manufactures Association of India (ACMA), with the trade body's director general, Vinnie Mehta, saying the sector was experiencing a "recessionary phase".

Japanese motorcycle maker Yamaha Motor and auto components makers including France's Valeo and Subros have laid off about 1,700 temporary workers in India after a slump in sales. Subros, which is part-owned by Japan's Denso Corp and Suzuki Motor Corp, has laid off 800 workers.

Domestic parts maker Vee Gee Kaushiko has cut 500 people while Yamaha and Valeo last month reduced their workforces by 200 each, said several sources aware of the cuts.

Meanwhile, automotive supplier Wheels India could cut its temporary workforce by as much as 800 and has started realigning its shifts.

The layoffs come as carmakers including Honda Motor, Tata Motors and Mahindra & Mahindra have implemented brief suspensions to production in recent weeks in the face of slow demand, separate sources said. The auto sector, which contributes more than 7 per cent to country's GDP, is facing one of its worst downturns.

Passenger vehicle sales have dropped for nine straight months through July, with some automakers suffering year-on-year declines of more than 30 per cent in recent months.

So how serious is these job cuts in the auto sector?

Let us understand it this way: The country is facing massive unemployment crisis at the moment whereas the number of job seekers is climbing rapidly with every passing day as there is no controlling the great big Indian population, set to take over China and emerge as the world¡¯s most populous country very soon.

To make things more clearer, consider this: As many as 72 lakh potential job seekers trained under the government of India¡¯s ambitious Skill India programme but only about 15 lakh among them were able to bag a placement.

It thus becomes evident that there is a huge gap between the creation of jobs and employment opportunities present in India and therefore at such a crucial juncture the layoffs from the auto sector are going to have massive implications on our per capita income, GDP as well as the economic prospects of a population already faced with numerous challenges.