About 10% of raw materials for the manufacturing of vehicles in India come from China. With China’s socio-economic state in a seizure due to coronavirus, the impact will be felt here as well.
Coronavirus has hit the world hard and global economies are really suffering because of lockdowns in several countries. Even here in India, manufacturers are struggling to keep up the production of BS6 cars due to lack of parts and raw material supply from China. About 10% of the raw materials used to build our cars come from China where coronavirus has wreaked havoc on the country’s manufacturing sector and international trade.
The Indian automobile industry already has had a tough year in 2019. Sales were significantly down through mid-year and this coupled with the switch to BS6 emission norms and new vehicle safety norms has had a major financial impact on car companies in India. While this year could have been a road to recovery, the situation seems even more dire now.
The coronavirus pandemic emerged out of the Wuhan province in China and now, it has spread to all continents of the world. More than 1.2 lakh people have been diagnosed with the virus around the world. There has already been more than 3,000 fatalities around the world. However, China is now finally starting to resume industrial production. Last month, the country had hit a historical low in manufacturing as numerous workers were sent home to cope with the spread of the disease.
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As for the automotive industry, all segments including passenger and commercial vehicles have been affected. Indian carmakers had stocked up for BS6 production in anticipation of the Chinese New Year. However, with the socio-economic situation in China having worsened over the last three months, the supply chain has been gravely affected and it will take some time to stabilize before car makers have looked for other parts suppliers.
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It is the electric vehicle production that will be most severely affected. Although Indian automotive companies have localised the production of control units to an extent, India is still dependent on China for lithium-ion batteries. In response, the Indian government has issued a force majeure about the coronavirus. Customs will clear shipments around the clock in the country.
