Indian car manufacturers had a cumulative pendency of over seven lakh orders as of December 2021 due to semiconductor shortage, the Survey revealed.

With the delay in supply, the average lead time in the automobile industry for 2021 has been around 14 weeks globally. India has also experienced similar trends and as per data from the Society of Indian Automobile Manufacturers (SIAM), carmakers sold 2,19,421 passenger vehicles in the domestic market in December 2021, down 13 per cent year-on-year (YoY).

And, this is not a demand problem but a supply-side issue, it said.

The Survey said a report by investment bank Goldman Sachs 2021 said that the supply chain disruptions in the semiconductor industry have spillovers in over 169 industries. The manufacturing of semiconductors requires large amount of capital and has an average gestation period of six-nine months. Moreover, it has a fairly long production cycle of about 18-20 weeks.

Among manufactured goods, however, some sectors showed strong YoY increase, including iron and steel, electronic components and pharmaceuticals while others such as automotive products and telecommunications equipment showed stagnation or decline, reflecting the recent shortage of semiconductors, the survey said.

It also highlighted about the government’s recent approval of an outlay of ₹76,000 crore for the development of semiconductors and display manufacturing ecosystem. Government’s intervention to boost this industry has come at a time when the global economy is facing an acute shortage of semiconductors due to severe disruptions in supply chains, the Survey added.

According to industry bodies, the Survey reflects practicality in its evaluation of the economy and the road ahead.

“The Economic Survey offers a succinct and a candid assessment of the Indian economy and reiterates confidence in India’s ability to move onto an accelerated growth path,” T V Narendran, President, CII, said.

CII agrees with the Economic Survey that reforms and other interventions of the government such as the PLI Scheme for 13 sectors, the repeal of retrospective taxes, the changes in the public procurement policy, reforms in telecom and aviation, financial sector reforms, MSMEs among others would build trust factor among the investors and gave a fillip to industrial growth, he said.

“The Economic Survey has highlighted that growth in the next fiscal will be supported by private investments, exports and supply side reforms. The government has not shied away from taking bold measures that are good for the economy and its various constituents. We hope to see the same spirit getting reflected in the upcoming budget,” Sanjiv Mehta, President, FICCI, said.

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