Middle East Crisis: Supply chain threat looms over Indian auto sector, know what will be the impact

Middle East Conflict Auto Supply: Due to the ongoing fierce conflict in the Gulf countries, India’s automobile industry may have to face big challenges in the coming weeks. Although at present there is no direct impact on the factories, but experts believe that if the situation does not improve, production will be affected. Companies are currently monitoring the situation closely and are in constant touch with their suppliers so that any crisis can be dealt with.

Growing concern about gas supply

According to industry officials, the biggest concern remains regarding gas supply because it is used extensively in manufacturing. Commercial LPG and other industrial gases are considered very important for important works like paint shops, casting units and forgings. If the shortage of these gases continues then there is a possibility of a huge increase in the cost of manufacturing vehicles in future.

Interruption in supply from Qatar

According to reports, gas supplies from Qatar have almost stopped due to Iran’s missile and drone attacks affecting production. Many suppliers have already given official information about delays in the delivery of components due to increasing tensions in the Middle East. At present, companies have essential component stock for 4 to 6 weeks, which gives them some relief.

Different impacts on companies

Dependence on gas varies from company to company, like Maruti Suzuki’s factories use gas the highest i.e. about 74 percent. Whereas, gas dependence has been recorded at 38 percent in Mahindra & Mahindra, 33 percent in Tata Motors and only 31 percent in Hyundai Motor. This means that if supplies remain disrupted for a long time, companies like Maruti will be impacted the most.

Production and future status

Mahindra, Maruti, Tata and Kia India have clarified that at present there is no direct impact on their current production and supply chain. However, experts say that if this international crisis continues for more than two months, real problems and delays may begin. The coming few weeks will be very important for the Indian auto sector which will decide how serious the situation can be.

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Vigilance and alternative routes

Auto companies are more in touch with their suppliers who completely depend on imports or gas supplies. Since the situation is changing very rapidly, companies are ready to take immediate tough decisions and change production if needed. At present, India’s auto sector seems safe but disruption in sea transportation is a big threat to production.