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India's economy suffers car crash

Video Credit: Reuters Studio - Duration: 01:56s - Published
India's economy suffers car crash

India's economy suffers car crash

Automakers, component manufacturers and car dealers in India have laid off an estimated 350,000 workers since the start of the year, in response to plunging sales.

As David Pollard reports, the downturn is beginning to have a wider impact.

Cars wait for buyers .... workers wait for work.

Making vehicles is a way of life in the manufacturing town of Manesar.

But India's car industry is increasingly in crisis.

A sector that accounts for 7% of the nation's output has shed 350,000 jobs this year, it's estimated.

And there's a worrying new trend: even those who don't directly work in it are being hit.

Like local grocery store owner and landlord, Billu Singh Rajput.

(SOUNDBITE) (Hindi) LANDLORD WHO RENTS TO MIGRANT WORKERS AND GROCERY STORE OWNER, BILLU SINGH RAJPUT, SAYING: "My earnings have fallen 50 percent.

There used to be a lot of labourers living here but now they don't live here anymore, so no one's left to buy our stuff.

And only 30 of our 40 rooms are occupied." A slowing economy is blamed ... For a massive slump in vehicle sales.

The 30% drop forecast for August would be a 10th straight month of decline.

When incomes are suffering - and global trade tensions are on the rise ... The financial sector's reluctance to extend consumer loans doesn't improve the outlook.

Which threatens to go from bad to worse, says Vinnie Mehta of the Auto Components Manufacturers Association.

(SOUNDBITE) (English) DIRECTOR GENERAL OF AUTOMOTIVE COMPONENTS MANUFACTURERS ASSOCIATION (ACMA), VINNIE MEHTA, SAYING: "We believe that if the situation continues and if there is no government intervention, the job loss could be as huge as 10 lakhs.

And this is really very concerning for us." Ten lakhs equals one million people - in a sector estimated to account for 35 million jobs.

As for government intervention: India's finance minister last month promised to lift a ban on buying new vehicles for government use.

But more is needed, pleads an industry looking to Prime Minister Narendra Modi for help.

After a landslide election win in May, he is firmly in the economy's driving seat.

The question for carmakers is: will he oversee a sector going forward - or into reverse?




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