The outbreak of Coronavirus (Covid-19), which is having a global impact across the social and industrial firmament, is now impacting India Auto Inc through delays in the automotive supply chain to original equipment makers (OEM) and component manufacturers. As a result, Covid-19 has also impacted the forging industry adversely, claims the Association of Indian Forging Industry (AIFI). AIFI is the apex body of the Indian forging Industry and comprises over 250 members, who command a large market share of the total production.
China, which is largest exporter of components to India, accounts for 26 percent of India’s automotive component imports, which is why the potential for further supply chain delays is high across the passenger vehicle, commercial vehicle and two-wheeler segments.
In an official statement, S Muralishankar, president, AIFI said, "The disruption caused by the Coronavirus has hit the automotive industry and thus also affected the automotive component and forging industries. Coronavirus is expected to have an impact on the Indian automotive industry and hence also on the automobile component and forging industries, which had already reduced their production rate due to the market conditions and on account of the impending change over to BS VI emission norms from BS IV from April 1, 2020.”
Currently, some OEMs have reduced their production programmes. Two-wheeler manufacturers TVS Motor Co and Hero MotoCorp have cut their production plan by 10 percent for February 2020 due to a delay in sourcing of certain components for BS VI vehicles.
He added, “The problem is further aggravated by the Chinese government's suspension of shipments by sea until further notice and allowing air-only shipments that are not suitable for auto components and forging industries. Therefore, Indian OEMs are unable to plan production beyond the inventory as currently available to them.”
Furthermore, international customers have asked for shipments to be delayed till further notice as their supply lines too are facing the adverse impact of the Covid-19 disruption due to the shutting down of manufacturing facilities temporarily in China.
The Indian government has issued a notification mandating the decontamination of containers at the port prior to release to the Indian Customs. However, as the guidelines/procedures to be followed for decontamination have not yet been notified, it is not possible for Indian importers to clear consignments that have already reached India in time.