Mar.19

Unavailability of Auto Parts throws Gujarat Auto Sector Out of Gear

unavailability of automobile Industrial machinery parts

Industrial Machinery Parts’ Lacking Supply Affects Production Boost Negatively

When Ratan Tata got the green signal from Mr Narendra Modi, then Gujarat Chief Minister, it became a trend setter of the sort turning the State into a potential automobile hub of the country.

It was however General Motors, which put up Gujarat State’s first automobile plant at Halol followed by Nano Car plant of Tata Motors at Sanand.

Now with Ford Motors, Suzuki India, Honda Motorcycles and Scooters India setting shop, a typical problem has come to plague such auto majors who face slow down in production/output due to surprising lack of spare part vendors.

Tier I, II and III auto part vendors always play a very important role as witnessed by some of the famous auto hubs of the world like Dallas (Chevrolet) and Hannover (Volkswagen). Car manufacturers have to strategically depend upon such industrial machinery parts vendors who establish their smaller units and plants in vicinity of the main automobile manufacturers from strategic and logistics point of view.

According to one supplier who supplies to both Suzuki and Tata Motors, only 10-15% of the total Tier I suppliers of India have established their manufacturing facilities in Gujarat, so far.

A supplier requesting anonymity said, “Negligible Tier II suppliers are currently present in the State, today.”

He added that issues like availability of skilled workers, labour laws and adaptability of migrant work force joining from other parts of the country, and non availability of residential areas on grounds of diverse food habits, may be also acting as stumbling blocks.

To this end, Auto Component Manufacturers Association (ACMA) has decided to hold a road show in Gujarat on March 18/19, 2018. Vinnie Mehta, Director General, ACMA quoted in media that the idea is to help original equipment makers (OEMs) find new suppliers in Gujarat and provide a platform for the auto sector to interact with government officials and seek solution to this peculiar problem through this event.

If the State is tipped to become the next auto hub of the country, then the state government needs to also take a sympathetic view of the anomalies faced by this ‘sun-rise’ sector. This will indeed make the State hit fast track of progress, industry insider stated.

In India, value of output in manufacturing is around 350 billion USD in 2016-17, of which spare parts including automobile, machinery constitutes 42 billion USD and automobile spare parts constitutes 21 billion USD[1]. According to Cognizant, 20:20 insights, aftermarket sales and services will be an important revenue stream and will also be profitable one for manufacturing.

Manufacturing community in India is yet to arrive and identify such opportunities in machine/auto spare parts verticals. While industry may take its own time, it is for the government and policy makers to ensure that conducive business environment is created for spare parts vertical and its related businesses to mushroom, according to an expert.

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