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India’s auto industry likely to be negatively impacted if coronavirus persists: ICRA
Feb-20-2020

Ratings agency ICRA has said that India's automobile industry may be negatively impacted and supply chain disrupted if the Coronavirus (COVID-19) outbreak in China and South-East Asia persisted longer, as China accounts for 27 per cent of India's auto component imports valued at $4.8 billion. These countries play a critical role in automotive supply chain and domestic OEMs source critical components and sub-components including fuel injection pumps, EGR modules, electronic components, turbo chargers from these markets which in turn directly or indirectly depend on China.

The agency mentioned the impact is estimated to be higher for high value-add and customised components, while commoditised products could shift to alternative suppliers. It said disruption in supply of certain critical components sourced from China will have differential impact. OEMs sourcing components such as electronic components, fuel injection pumps, turbo charger, meter sets, LEDs, magnets, airbag components, steering system components and electric vehicle components will be affected the most.

It added, in particular, the impact will be more profound on commercial vehicle (CV), passenger vehicle (PV) and the two-wheeler (2W) segments, while tractor segment which has high localisation levels with limited dependence on imports will have much lesser impact. In terms of sectoral outlook on domestic automotive industry, the agency said it has a negative outlook on the CV segment due to surplus capacity in system, existing financing constraints, weak macro-economic scenario and industrial output which is likely to keep demand subdued.

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