Mumbai
A steady flow of export orders and turnaround in automobile sales have helped small and medium auto component makers emerge relatively unaffected from disruptions caused by the second pandemic wave. The devastating second wave brought about a complete halt in production and sales of vehicles for the domestic market as most states had imposed restrictions. According to top industry executives, decisions by several state governments to let factories run with limited capacity allowed auto parts makers face the crisis much better than last year when there was a strict nationwide lockdown.
Micro, small and medium enterprises (MSMEs) form the bulk of India’s auto component industry and have been among the worst hit by the pandemic due to disruptions that include shortage of raw materials, manpower as well as finances.
Automobile sales were hit first due to lockdown measures imposed in Maharashtra to restrict the spread of the second wave. Other states followed from the second half of April as the pandemic exploded across the country, which severely affected production and sales of vehicles.
According to bankers, automobile dealers and component makers have been slightly better off this time compared to last year and expect that a moratorium on loan repayments and debt recast offered last year have helped the sector prepare better for the second wave.
RBI governor Shaktikanta Das also referrred to a strengthening of the external environment and said it augurs well for India’s export sector. This comes at a time when India’s urban demand has weakened following the second wave.
He said that global demand conditions are expected to improve further due to the fiscal stimulus packages and the fast progress of vaccination in advanced economies and that India’s exports in March, April and May 2021 have launched into an upswing. He believes that the need of the hour is to provide enhanced and targeted policy support for exports.
Source: The Mint
Image Source: Google Images
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