Semiconductor shortages have prolonged the automobile waiting period in India as production has been impacted, said Economic Survey FY22.
The global phenomenon has been blamed on the exponential rise in demand for personal electronics such as cellphones and laptops during the ongoing pandemic.
On a technical basis, semiconductors play a critical part in the production of internal combustion engines. They are an integral part of all kinds of sensors and controls in any vehicle.
The survey document cited a report by investment bank Goldman Sachs 2021 which states 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 6-9 months. Moreover, it has a fairly long production cycle of about 18-20 weeks. Hence, any recovery from the supply chain disruptions will be a slow and costly affair.
“The report further stated that microchips and semiconductors account for about 4.7 per cent of value added by the automotive industry. 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 in the automobile sector, the survey document said.
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 (YoY). “This is not a demand problem but a supply-side issue. The information from various car manufacturer’s websites reveals a cumulative pendency of over 7 lakh orders, as of December 2021.”