Business
Indian auto-parts makers face job losses as EVs rev up
Published by Jessica Weisman-Pitts
Posted on November 7, 2022
6 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Jessica Weisman-Pitts
Posted on November 7, 2022
6 min readLast updated: January 20, 2026
By Anuradha Nagaraj
CHENNAI, India (Thomson Reuters Foundation) – In Coimbatore, a city that manufactured one of India’s first homemade diesel engines, K. Rajesh finds himself at a crossroads as automakers rush to produce more electric vehicles (EVs).
The boss of a local auto-component manufacturing firm in southern Tamil Nadu state, Rajesh is part of a supply chain that industry experts say will be shaken up as India accelerates its transition to EVs, to help meet its climate goals.
“For small players like me, the rise of EVs means business will go down,” said Rajesh, who runs Autotech Engineers, a factory that makes parts for two-wheelers.
“We are aware that the business will change, but right now I am sticking to what I know and have been doing for the last 20 years – replicating design drawings sent by companies into perfect parts. The future, however, is uncertain,” he added.
His voice echoes the concerns of others in India’s small and medium-sized auto-component industry, whose workforce is estimated at about 5 million. Millions more are employed in informal repairs and maintenance.
In a first, the Tamil Nadu state government initiated a mapping of this supply chain last month, in an effort to understand the impacts on companies and their workers of the transition to making cleaner cars and scooters.
“We know for a fact that there will be a serious loss of business,” said V. Arun Roy, secretary of the Tamil Nadu department for medium, small and micro enterprises, adding that they will have to be prepared for the hit.
“At present, there is not enough information on who and how many will be impacted. Mapping this data is essential to plan for the EV transition, which is inevitable,” he told the Thomson Reuters Foundation.
India sees clean auto technology as central to its plans to curb its dependence on petroleum products and ease debilitating air pollution in its cities, while meeting its national commitment to cut planet-heating emissions from fossil fuel use to net-zero by 2070.
The government is aiming for 30% of total car sales to be electric by 2030, up from EVs being just half a percent of all vehicles on Indian roads today, according to official data.
It is offering companies billions of dollars in incentives to build clean cars and their components.
A September study by McKinsey and Company, in collaboration with the Automotive Component Manufacturers Association (ACMA), states that about 75% of the inventory for EVs will consist of components requiring new design and manufacturing processes.
The consultancy estimates that a transition to EVs could impact up to half of internal combustion engine (ICE) vehicle-parts suppliers – from those producing components from plastic and rubber or engine parts, to electronics makers.
Ashwini Hingne, a senior manager in the climate programme at the World Resources Institute (WRI) India, said conversations about a “just transition” to a low-carbon economy often focus on the shift away from fossil fuels like coal but should be wider.
“The reality is that everyone in the value chain will have to make the switch and there are many high-risk category clusters like the auto sector and the many small manufacturers in its supply chain,” said Hingne, whose research organisation is working with Tamil Nadu’s government on supply-chain mapping.
FEWER JOBS
Rajesh, 45, employs eight people at his manufacturing unit. Like him, many in Coimbatore run hole-in-the-wall businesses that are essential to automotive production in India.
“The common saying is that every car in India will have at least one nut or bolt that has been manufactured here in Coimbatore,” said S Balakrishnan, who makes brake components.
“If every street has 10 homes, then there will be 10 links to small manufacturing units. There are a lot of skilled people in these by-lanes that depend on the auto industry.”
India is the world’s fourth-largest car market.
Both foreign and Indian original equipment manufacturers (OEMs) rely on local auto-component makers in hubs like Coimbatore, researchers say, also pointing to the large network of garages and scrap dealers linked to the industry.
Depending on the level of local manufacturing, a scenario with 30% electric cars by 2030 may support around 20-25% fewer jobs than the ICE industry now as EVs rely more on software and electronics, according to a 2019 report on India’s transition.
The report by two nonprofits – the Council on Energy, Environment and Water and Shakti Sustainable Energy Foundation – said catering to the new EV jobs would require re-skilling and vocational training for the workforce.
At a webinar earlier this year on achieving a “just transition” in the sector, hosted by government think-tank Niti Aayog and WRI India, panelists estimated that 20-40% of existing jobs would become obsolete.
Those affected would include manufacturers, auto dealers, after-sales professionals and roadside mechanics, as EVs have fewer mechanical parts and repairs require sophisticated electronics expertise, they said.
The “writing is on the wall” for India’s auto-component industry, which is worth more than $50 billion, said Vinnie Mehta, director general of the ACMA.
“Manufacturers will have to diversify,” Mehta said, noting that the supply chains for two and three-wheeler vehicles would be affected first.
“Small players need to have a vision and look at the new opportunities emerging,” he added.
SKILLS NEEDED
K. Dhurgairaj started GravitoTech Auto Components just a year ago, with a clear focus on tapping into the EV market.
After spending years in the sector doing quality checks, the Coimbatore-based entrepreneur said it was the right time to start research and development on EV manufacturing components.
His company will also need to obtain third-party certification and meet mandatory standards for EV components.
“I want to be ready with everything when the boom happens,” he said.
Industry experts said auto-parts makers will get government incentives to produce components for clean cars as well as to invest in advanced technologies like sensors, automatic transmission, cruise control and other electronics.
Mehta of the ACMA said companies are already tying up with colleges to look at skills-building for the EV sector, besides exploring opportunities to train up today’s workforce.
Dhurgairaj said investing in EVs “is a sure bet”.
“Everyone knows this but it will not be easy for all to make the switch. It will take time, money and new skills,” he said. “We have to slowly equip ourselves for the future.”
Originally published at:
(Reporting by Anuradha Nagaraj; Editing by Megan Rowling. The Thomson Reuters Foundation is the charitable arm of Thomson Reuters. Visit https://www.context.news/)
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