Thousands left in lurch after COVID-19 impact rattles Pune’s auto industry

Thousands left in lurch after COVID-19 impact rattles Pune’s auto industry

Thousands left in lurch after COVID-19 impact rattles Pune’s auto industry

Companies are yet to rehire employees who were fired this year to cut costs. And unlike last year, the drop in sales since the second wave is yet to pick up.

Pune: Suyash Chaudhari, 36, a former employee of General Motors, was among around 5,000 employees who lost their jobs when the company shut its unit in Pune in June 2021. Finding no other source of income, he is now driving an Ola taxi for around 15 hours a day to manage the expenses of his three-member family and repay his home loan.

The COVID-19 pandemic has dealt a heavy blow to the working class in Pune, famed as Maharashtra’s auto hub. Thousands of employees lost their jobs when companies here started tightening straps on their spending to sail through the crisis. Many of these former auto workers have taken up odd jobs as manual labourers, cab drivers and food delivery persons to survive the tide but a major chunk of them are still struggling to find a source of income to take care of their families.

Chaudhari said that he lost his mother in the second wave of the pandemic. Even though he spent Rs 7.5 lakh — all his life’s savings — on his mother’s treatment, it could not save her life. "Despite desperate attempts, it was very difficult to find a new job after the lay-off in June. Hence, I decided to drive a cab to earn my bread and butter,” he said.

According to a survey conducted by the Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA), only 48 per cent of the companies in Pune (not just in the auto sector) admitted that their production had bounced back to pre-pandemic levels, whereas the remaining 42 per cent were hoping to reach those levels in the next six months.

Mukund Shinde, a 26-year-old contract worker who was laid off by another automobile manufacturing unit at Chakan in Pune 10 months ago, said that he was yet to receive any call to rejoin work. The company had reduced its workforce with a promise to take them back once the situation became normal. Finding no other option for survival, he is now working as an agricultural labourer in his native village in the Marathwada region of Maharashtra.

Shinde told 101Reporters that the situations of contract workers laid off by his company were worse than those of the ones who were on its payroll. "I called the company many times, requesting them to allow me to resume work, but they kept telling me that they would convey my rejoining date soon.”

Another worker fired by General Motors in June told 101Reporters on condition of anonymity that his wife of four months had sought divorce citing his inability to fund her “expensive lifestyle” without a new job. "She is leaving me because I have lost my job. I have no idea what to do. I feel that I am a loser," he said, adding: “I may recover from the financial crisis in the future, but how will I be able to repair the dent it caused on my family life?”

As per the Directorate of Industrial Safety and Health Department of the Government of Maharashtra, Pune district has approximately registered 3,250 auto companies which employ around 4 lakh people, many of them migrant workers from Uttar Pradesh, Bihar, Madhya Pradesh.

Chakan industrial estate (Picture credit - Naresh Natu)

In the Chakan auto cluster alone, around 750 end-to-end automobile manufacturing units employ around 2.5 lakh persons. The auto cluster hosts production plants for the Volkswagen Group, Daimler-Benz, General Motors, Mahindra & Mahindra, Jaguar Land Rover and Bajaj Auto, General Electric and Hyundai among others.

Dilip Batwal, secretary of the Federation of Chakan Industries, said, “The pandemic’s impact is still lingering. This is the reason behind the companies not being able to take back around 30 per cent of the employees that were laid off. Low demand, as well as a shortage of semiconductors, is the major reason behind the ongoing slowdown in the automobile sector.” And of late, the fear triggered by the emergence of the Omicron strain of coronavirus is worrying industrialists. 

Swapnil Dalane reckoned the pandemic has set him back by at least 4-5 years. Proprietor and Director of the 200-strong Dalane Industries Private Limited in Chakan, which supplies chassis to many auto manufacturing units here, Dalane said, ''In the pre-Covid situation, we were doing a good number of orders. That's why we had decided to expand. But the sudden Covid outbreak and lockdown restrictions have pushed back our plans. Demand is low. And now banks are asking us to repay previous dues without which they are not entertaining further loan requests.''

According to the Society of Indian Automobile Manufacturers (SIAM), the production of automobiles across India – commercial and personal vehicles – slumped from 3,09,14,874 units in 2018–19 to 2,26,52,108 units in 2020–21. Domestic sales dipped from 2,62,66,179 units in 2018–19 to 1,86,15,588 units in 2020–21. A similar trend has also been witnessed in the automobile export sector – it came down from 46,29,049 units in 2018–19 to 41,28,928 units in 2020–21.


MCCIA Director General Prashant Gilbane said, “The automobile industry was already witnessing a slowdown before the spread of COVId-19. The pandemic only exacerbated the slump. During Diwali in 2020, thanks to pent-up demands, there was a sign of significant recovery as automobile sales were inching up.  However, during the same festival season this year, the figures were very disappointing, with a 23 per cent dip in the sales of personal vehicles and a 17 per cent decline in the sales of two-wheelers.”

He added, “The sales of personal vehicles were impacted mainly because of supply-side constraints posed by the shortage of semiconductors. The consumers’ confidence was also dampened by the lingering clouds of uncertainty created by the pandemic.”

Even as the Union government and the finance department are busy preparing the budget for the 2022–2023 fiscal, the stakeholders of the automobile industry are expecting some big measures of relief. The Federation of Chakan Industries wants the government to extend support to small, local companies in the form of special grants and concessions for manufacturing semiconductors to overcome the shortage.

In this vein, Batwal welcomed the Centre’s new 76,000-crore scheme to boost semiconductor manufacturing in India. “This is a much-needed relief to the auto industry and will help the industry in the long run,” he said. He added that China being the dominant exporter of semiconductors and considering our frequent border tensions with China, it is a need of an hour to be self-sufficient in semiconductors.

However, he worried about this scheme too being held back stuck by red tape, like many other ambitious government policies. “The government should look into the implementation of this scheme at the ground level, supporting the small players and not just the Tatas and multinationals.”

Batwal also touched upon a new government policy mandating that vehicles older than 15 years be scrapped. At present, these old vehicles are being recycled and sold to automobile manufacturers at a very high rate, which cascades into production cost inflation. The industry wants the government to make a provision in its policy to reserve a certain percentage of automotive scrap for the automobile industry at discounted rates. 

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