India’s auto industry is grappling with significant challenges as two leading industry bodies, the Automotive Component Manufacturers Association of India (ACMA) and the Society of Indian Automobile Manufacturers (SIAM), appeal to the government to lift restrictions on certain steel imports. With steel being a critical raw material, these restrictions could disrupt the production momentum of one of the country’s fastest-growing industries.

Industry Concerns Over Steel Shortages

Both ACMA and SIAM have voiced concerns about low steel inventory levels, warning that this could lead to production halts across the automotive sector. Steel, especially certain specialized grades, is indispensable for manufacturing auto components, and any disruption could severely impact the supply chain.

Government’s Move Toward Safeguard Duty

The Indian government, meanwhile, is mulling over the imposition of a safeguard duty on imported steel, driven by a surge in imports that have reached a seven-year high of 5.7 million metric tonnes in the early months of the current financial year. While the measure aims to protect domestic steel manufacturers, it could exacerbate the challenges faced by the automotive industry.

Hurdles in Localization Policies

Efforts to localize steel production through Quality Control Orders (QCOs) have inadvertently added to the industry’s woes. Obtaining no-objection certificates (NOCs) for importing specific grades of steel required for high-end auto manufacturing has become a cumbersome process, causing delays and uncertainty.

Growth Amidst Challenges

Despite these headwinds, the automotive components industry in India has shown resilience, reporting an impressive 11.3% year-on-year growth to reach ₹3.32 trillion in the first half of the financial year. The robust demand for SUVs and premium two-wheelers has been the key driver behind this growth.

On the export front, the industry continues to shine, with exports growing by 7% year-on-year, largely driven by demand from markets in the US and Europe. This export surplus underscores the sector’s global competitiveness, even as domestic challenges loom large.

Constructive Dialogue with the Government

In response to these challenges, ACMA’s Director General Vinnie Mehta expressed optimism about ongoing discussions with the government. He highlighted the pressing need for timely resolutions to the issues of steel supply and import restrictions, emphasizing the critical role of the automotive industry in India’s economic growth.

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The outcome of these deliberations will be crucial not only for the auto industry but also for the broader economy, given the sector’s substantial contribution to manufacturing and exports. Stakeholders will be watching closely to see how the government balances domestic steel industry protection with the growth needs of the auto sector.

Stay tuned for updates on this evolving story and its implications for India’s industrial landscape.