India may have become the second fastest growing auto market in the world but the country's automotive industry is up against the problem of lack of skilled manpower that can hamper its growth, according to consultancy firm Ernst & Young.
Besides, slow pace of infrastructure development can become a roadblock to the industry's drive to achieve a total turnover of $145 billion and provide an additional employment to 25 million people by 2016 under the Automotive Mission Plan (AMP).
"Skilled labour and infrastructure are the biggest challenges in front of auto industry. A shortage of 5 million people is there at present only in the manufacturing field of the industry," Ernst & Young National Leader (Automotive Sector) Rakesh Batra told PTI.
Manufacturing accounts for about 30 per cent of the entire automotive sector, he added.
"The industry provides direct and indirect employment to over 13 million people. Though India produces the highest number of engineers in the world, it is expected that only 20-30 per cent of these are employable," Batra said.
As per E&Y, the Indian industry will need an additional 30 million manpower by 2022 to meet growing requirements of the market, which became the second fastest growing last fiscal in the world with 26 per cent increase, next to China's 42 per cent.
On the infrastructure front, Batra said: "Since auto production hubs are scattered unevenly in India, there is a vast movement of auto products across the country, which is very inefficient because of infrastructural and policy challenges."
Indian ports are also not adequately equipped for exports with electronic information exchange, he added.
"Compared to other nations, the current pace of development is a matter of concern," he said.
Batra also said that India lacks in expert R&D capabilities such as prototyping of a product.
"Domestic players spend less than 1 per cent of their turnover on R&D compared to global average of 5-8 per cent," he said, adding the centres set up here by international firms are confined only to localisation of imported parts and data services.
Batra, however, said despite all these lacunae, the domestic passenger vehicle market is expected to reach 3 million units by FY15 from the current level of about 1.9 million units.
"Exports of passenger vehicles is also likely to cross one million units by FY15 ... Last fiscal it was about 0.4 million units," he added.
Batra said the domestic two-wheeler industry is also expected to grow to 16 million units from the current 10 million units level.
He said India is likely to retain the position of second fastest growing auto market after China in this fiscal.
