India’s auto industry will need 15 million skilled workers by 2022

The automobile and automotive components industries in India face the likelihood of a shortage of skilled workers in the not-too-distant future. 

A report by the National Skill Development Corporation (NSDC) has cited the need for nearly 15 million (1.5 crore) directly employable people by 2022 in the automobile sector. The report suggests that the state of Haryana currently leads in the production of passenger cars, motorcycles and tractors, contributing 50 percent of the total passenger cars and two-wheelers produced in India.

As global companies explore India as a manufacturing base to either shift their operations from Europe to India or set up new plants here and in other south-east Asian countries, India and other BRIC nations are expected to emerge as major manufacturing hubs due to the availability of cheap labour and other advantages. A number of global auto component manufacturers, which have a manufacturing presence in India either through joint ventures or other alliances, are focusing on exports as excise duty on completely knocked down (CKD) units is low.

Industry growth, fast-changing technologies, a growing economy, larger disposable income and shorter lifecycles for new cars in the hands of consumers have in the recent past necessitated a growing need for fresh skilling and upskilling in the sector.

Of the 7.6 million people employed in the auto manufacturing sector, 72 percent or 5.4 million are engaged in the component sub-sector. Among the auto component suppliers, 70 percent of whom constitute SMEs, a majority of the workforce is employed in Tier 3 cities and raw material manufacturing companies.

A total of 19.1 million people are employed in the Indian automobile sector directly or indirectly. This includes manufacturing in OEM, auto components, raw material factories, automobile dealers, service centres and other enabling sectors.

Commenting on the report, Dilip Chenoy, managing director and CEO, NSDC, said: “According to industry estimates, the automobile industry accounts for 22-25 percent of the country's manufacturing gross domestic product. FDI in the sector is allowed upto 100 percent under the automatic route. Therefore, an addition of a single manpower at the OEM’s end would lead to generating eight jobs at the vendor’s end. To meet the incremental human resource requirement in the sector, the entire ecosystem has been scaling up its training initiatives and aligning themselves to industry recognised national occupational standards.”

There is an urgent need to update the courses with the change in technology implemented at the plants, he added. “We need to emphasise on the promotion of small and medium scale enterprises as they have an immense potential of providing jobs at the entry level,” Chenoy concluded.