Even as the Indian auto components industry celebrated a record turnover of Rs 7.6 lakh crore (USD 85.9 billion) for the fiscal year ending March 2026, industry leaders are flagging the challenge of a severe and deepening labour shortage across India’s primary industrial belts, which threatens to dampen the growth momentum.
Vinnie Mehta, Director General of the Automotive Component Manufacturers Association (ACMA), characterized the current labour shortage as not limited to the automotive sector but visible across almost every industrial cluster in the country. . However, the underlying pressure on shop floors is mounting.
Why the Labour Force is Vanishing
The industry’s leadership identified a complex web of economic and social factors driving the shortage.
A significant driver is the soaring cost of living in urban areas. Following geopolitical volatility in West Asia, energy costs spiked, making it difficult for migrant workers to sustain themselves in industrial hubs.
Secondly, traditional cycles, such as the cropping and harvesting seasons, continue to pull workers back to rural bases. These were further exacerbated by recent festive seasons and national elections, which saw a mass exodus of workers that has been slow to reverse.
To counter these trends, some companies have resorted to providing lifestyle incentives, such as canteens and induction cookers, to help workers manage rising energy and food costs.
The 10-Year Outlook and the Automation
ACMA MD Vikrampati Singhania warned that labour will remain a "question to really examine" for the next 8 to 10 years. He suggested that the industry must fundamentally rethink its manufacturing philosophy to mitigate this long-term risk. "From manufacturing, I think we need to move into making manufacturing more automated, digitised, and robotised," Singhania stated.
The industry is already pivoting. Rather than viewing automation merely as a replacement for human hands, leadership sees it as a tool for consistency and scalability. Digitization is becoming essential to manage the "ups and downs in demand," allowing factories to ramp production up or down without being tethered to a volatile manual workforce.
Furthermore, as global customers demand higher quality standards for exports, automation is seen as the only way to deliver the "consistent quality" required to remain competitive on the world stage.