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February numbers of auto sales by FADA reflected an increase in demand. But,  a study on the supply side showed the biggest difference between demand and supply. It is due to the shortage of auto component parts, as manufacturers are not able to complete the requirement all over the world.

Supporting this, auto industry body SIAM on Thursday sought government help for localisation of electronic components, especially semiconductors, which is currently facing a global shortage, stating it would need huge investments. Semiconductors have become a crucial part of modern cars with increased electronic components and connectivity features.

Society of Indian Automobile Manufacturers (SIAM) president Kenichi Ayukawa, while speaking at an event organised by the Automotive Components Manufacturers Association of India (ACMA) said the two industry bodies are working together on a road map for self-reliance for more localisation of components.

“Together we have identified specific areas of engine transmission, electrical tooling, (special) grade of steel, etc. that have good scope for localisation,” he said.

Ayukawa further said, “For electronics areas, especially for semiconductor parts, government support is required for localisation as it needs huge investments. Auto demand alone is not enough for localisation in electronics.” The shortage of semiconductors globally due to a spike in demand from the consumer electronics industry during the COVID-19 lockdowns has impacted automobile manufacturers in India as well.

Union Minister Nitin Gadkari in support of SIAM urged automobile manufacturers to hike localisation of components to 100 per cent signalizing to increase basic customs duty on imported items if the companies fail to do so.

Mr. Gadkari added the present level of localisation of parts in the Indian auto sector is around 70 per cent and “at any cost, we need to stop imports of auto components”.

Mahindra & Mahindra has already stated that its passenger vehicle production has been impacted by the supply constraints, while others like Tata Motors and Maruti Suzuki are also keeping a close watch on the development.

Commenting on the recovery in the automobile industry from the coronavirus pandemic-induced disruptions, Ayukawa, who is also the managing director and CEO of Maruti Suzuki India, said, “While we are seeing a recovery in some segments, on the business front the situation continues to be challenging.” Stressing the point, Ayukawa said, “For the first 10 months of this fiscal, the April-January period, domestic sales are lower than what they were six years ago in cars, seven years ago in two-wheelers.” For commercial vehicles and three-wheelers also the sales are behind by many years, he added.

“So, to fully overcome this situation, component makers and OEM need to work more closely than ever before. The automotive industry needs to demonstrate a greater focus on quality, R&D, and maximize localisation,” he asserted.