India flags fuel risk to auto industry, calls for immediate production changes

Assembly lines that typically run at a steady rhythm could soon feel the need to change pace as India’s auto sector faces a fresh challenge: fuel uncertainty. A government advisory, triggered by disruptions in global energy supply due to the Iran conflict, is now pushing automakers to rethink how vehicles are built. These changes might potentially trickle down into changed costing and supply timelines for buyers.

A communication from the Ministry of Heavy Industries sent out on March 25 urged automakers and parts suppliers to fine-tune production cycles to avoid unnecessary fuel burn. The focus is on cutting energy use during idle periods, a move that may subtly alter factory output patterns if shortages deepen.

Push towards electrified operations

The advisory also signals a gradual shift inside factories themselves. Instead of relying on oil-based fuels, companies are being encouraged to move towards electricity where possible. The ministry stated, "Wherever technically feasible, a transition from oil-based fuels to electricity may be considered. Further, production schedules may be optimised to minimise idle and standby fuel consumption," pointing to a structural change in industrial energy use.

Material choices under review

Beyond fuel, the strain is beginning to show in raw material planning. Automakers have been asked to increase the use of recycled aluminium and consider substitutes for non-essential applications such as packaging. This reflects a wider supply squeeze already affecting multiple industries, suggesting cost pressures could build gradually.

Gas supply tightens for industry

With natural gas diverted towards household consumption, industrial users are receiving only about 80 per cent of their usual supply. Component manufacturers supplying companies such as Maruti Suzuki, Tata Motors, and Mahindra have begun reporting constraints, even as vehicle demand remains strong. Any prolonged shortfall could disrupt production schedules further.

Industry braces for a longer disruption

While the advisory stops short of mandating cuts, it signals rising concern within the government. For automakers, the uncertainty lies not just in fuel access, but in how long the disruption may last. As one industry executive put it, "I don't know how much we can change in the factory, but the takeaway is that this war is going to go on for a long time and we should be prepared," highlighting the cautious mood across the sector.

(With inputs from Reuters)

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