Monday, December 27, 2021
By Kamal Swami
Indian Auto Industry Optimistic About 2022
Lack of semiconductor chips, increasing cost of raw materials, the lockdown during the second wave of the global pandemic COID-19 are some reasons which affected the growth of the auto industry in 2021. Despite all these factors, the Indian Auto Industry is optimistic for the year 2022. However, there are chances that due to the speculated third wave of COVID-19 increasing cost of production may affect the growth of the industry.
In the words of Rajesh Menon, Director General, Society of Indian Automobile Manufacturers (SIAM), “Auto industry is hopeful that the new variant of Omicron of Covid-19 will not play a major spoilsport. We are hopeful that once the semiconductor crisis eases out, the industry can continue to witness strong demand and do better in 2022". According to Mr Menon, the auto industry expects that with the introduction of favourable policies like the PLI schemes for the auto industry and auto component manufacturers, the extension of the FAME-II scheme till 2021, and different policies by the government will help to boost the growth of the industry.
It is important to know that at present, the shortage of semiconductor chips is badly affecting the growth of the Indian auto industry. Due to this, the waiting period for vehicles is increasing every day. A semiconductor is an important component used in vehicles with internal combustion engines. It is also used in integrating sensors and controls in various vehicles. Commenting on the growth possibilities in 2022, Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA), said, “We see the year 2022 as a neutral year as the rise of Omicron has once again created fear globally". He also showed his concern for the supply of semiconductor chips. In his words, the supply of passenger vehicles will affect, if once again the countries manufacturing the chips impose lockdown or focus on manufacturing chips for electronic appliances. According to Mr Gulati, the demand for two-wheelers will also decline, if the third wave of COVID-19 is not controlled before its arrival.
Commenting on the existing situation, Hemal Thakkar, Director, Crisil Research, said, “Overall the automotive industry is expected to fare better than in FY21 as we will probably see continuous production throughout the year without any breaks provided Omicron is not very severe and there are no localised lockdowns". He also expects that the shortage of semiconductor chips will also be resolved and, the industry will stay strong in 2022.
