Indian auto industry to be negatively impacted, supply chain disrupted if Coronavirus persists: ICRA

India's automobile industry is likely to be negatively impacted and supply chain disrupted if the Coronavirus (COVID-19) outbreak in China and South-East Asia persisted longer, according to ratings agency ICRA.

These countries play a critical role in automotive supply chain and domestic OEMs source critical components and sub-components including fuel injection pumps, EGR modules, electronic components, turbo chargers from these markets which in turn directly or indirectly depend on China.

China accounts for 27 per cent of India's auto component imports valued at USD 4.8 billion and, the impact is estimated to be higher for high value-add and customised components, while commoditised products could shift to alternative suppliers, ICRA said in a statement.

Commenting on the development, ICRA Ltd Vice-President - Corporate Sector Ratings Shamsher Dewan said India's automotive supply chain could get disrupted if the manufacturing activities in China continue to remain impacted owing to coronavirus outbreak.

"The impact is estimated to be higher for high value-add and customised components, while commoditised products could shift to alternative suppliers. But high investments and gestation period involved in developing tooling remains the key prohibitive factor for an immediate shift to new suppliers," he added.

Dewan further said,"Moreover, given that OEMs are currently in the period of transitioning to BS-VI production, disruption in supply of critical components required for the same has the potential to impact smooth transition to new emission norms."