India uses diplomatic route to help car makers procure chips amid global shortage

India is using the diplomatic route to get its auto industry out of a tight situation. New Delhi is working the phones to reach out to Berlin, Washington, Tokyo and Taipei to ask for semiconductors for its factories in Manesar, Pune and Chennai in the busiest season for the auto industry.

India’s Ministry of External Affairs (MEA) stepped in to solve the crisis after being alerted by the auto industry association Society of Indian Automobile Manufacturers (SIAM), according to an Economic Times report.

Semiconductor shortage has hit several car manufacturers where production has taken a hit.

“Any disruptions in the supply chain at this juncture, due to shortages of semiconductors, when there is a revival in demand in some of the vehicle segments after prolonged de-growth is only hurting the industry as assembly lines are not functioning at optimum capacity,” wrote SIAM to MEA on the matter.

Indian auto manufacturers import semiconductors components, assemblies from several global suppliers in Germany, US, Japan and Taiwan.

According to the report, the industry estimates that the shortage of semiconductors is likely to cause vehicle makers to lose production of 80,000-100,000 units in the quarter. India’s biggest auto manufacturer Maruti Suzuki alone will take a hit of 11,000-12,000 units, causing a revenue loss of Rs 500-700 crore through August with curtailed production of high-margin models such as Baleno, Swift, and Dzire, if the crisis is not resolved soon.

After OEM-level negotiations failed, industry stakeholders have pinned their hopes on the diplomatic channels for a potential way out of the current crisis. Auto industry bodies have appealed to the MEA to raise the matter with various source countries in order to get ease the supply for semiconductors, chips.   

The Department of Heavy Industries (DHI) has also been roped to help Indian car makers with its ongoing crisis and help in getting the chips from abroad, the report said quoting MEA sources. 

Source: India uses diplomatic route to help car makers procure chips amid global shortage