The Indian domestic auto industry has been facing a slowdown even before the COVID-19 threatened the global economy. Post lockdown measures, the already struggling auto sector is in would be affected further. Auto component industry body, ACMA (Automotive Component Manufacturers Association) has thus asked the government to provide financial support to the auto sector. Mainly since many small and medium sized firms are likely to face insolvency.
Though ACMA has accepted the extension of the lockdown amid the spread of COVID-19, it believes the auto industry needs sincere attention as operation suspensions have intensified demand crisis the auto sector faced. The association has urged the government to infuse finance in the sector to ensure it has a sustainable future post lockdown.
The industry body states auto components industry is suffering Rs1,200cr loss per day owing to the lockdown. Without a fiscal stimulus, it will be very difficult to sustain. ACMA has thus suggested fiscal measures including support for working capital by relaxing borrowing norms and interests on statutory payments, extending moratorium on payment of principal amount and interest by at least a year.
ACMA members have also shut operations though they are in touch with their customers and original equipment manufacturers. These members will recommence operations once the auto manufacturers and the OEMs restart.