Why 80% car manufacturing in India face standstill due to protests at Posco

The auto industry in India is already facing a crisis due to global shortage in auto parts. What seems to have aggravated the problem is protests at the Posco Maharashtra Steel Limited (PMSL) plant site in Raigad district. The protests, which has been going on over labour issues for some time, has disrupted supply chains for carmakers.

According to auto industry body Society of Indian Automobile Manufacturers (SIAM), production of cars at several facilities across India may come to a standstill if the protests continue unabated. SIAM has already written a letter to Uddhav Thackeray, chief minister of Maharashtra, seeking his urgent intervention to end the protests and resume work at the plant.

News agency Reuters accessed the letter which read, "The blockage is ... causing disruption in the supply chain and is resulting in shortage of critical auto parts and components.

In view of this, production activity at the facilities of vehicle manufacturers in India, is likely to come to a standstill."

Posco is one of the major suppliers of steel to the industry. It produces cold rolled steel sheets (CR) - a key component for carmakers.

Indian vehicle manufacturers like Maruti Suzuki, Hyundai Motor, Kia Motors, Tata Motors and Mahindra & Mahindra are some of the companies who usually get steel from this plant for manufacturing. According to estimates, these carmakers contribute to more than 80 per cent of overall vehicles manufactured in India.

The auto industry body SIAM has raised apprehensions that the protest could actually peg back the recovery efforts by the auto industry since the Covid-19 crisis, that caused major disruption last year. "Such incidents would also seriously tarnish the image of India as a preferred destination for investment," SIAM said in its letter.

For Maharashtra, this is the second major crisis involving the auto industry after it recently rejected US carmaker General Motors' application to cease operations at its Talegaon plant. GM had decided to sell of this plant to Chinese auto major Great Wall Motors, which was planning to invest in India before Covid-19 crisis hit the world. Since then, the pandemic, coupled with tensions between India and China, have delayed completion of that deal.

(With inputs from agencies)

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