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
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