By Shailesh Yadav New Delhi [India], October 17 (ANI): The recent GST rate cut has led to a surge in orders for auto component manufacturers, driven by increased vehicle sales and consumer purchasing power.

Speaking to reporters, Nirmal K. Minda, the newly elected President of ASSOCHAM, stated that the tax reduction has boosted demand for automobiles, resulting in a positive impact on the auto component sector during the festive season.

"Sales of automobile companies have increased, and due to this, we auto component companies are sitting on good orders from automobile manufacturer companies," Minda said.

Sustainability of Festive Demand

While acknowledging the positive impact of the festive season on growth, Minda cautioned that the buying momentum might not sustain beyond the festive period. The GST rate cut has effectively enhanced consumer affordability, translating into robust demand for the automotive sector.

Addressing Rare Earth Magnet Shortage

Addressing concerns over the shortage of rare earth magnets, Minda emphasised the need to explore alternative solutions and reduce dependence on a single country for supplies.

"Today, we are dependent only on one country. So we may try for new ways to address this issue," he said.

The shortage has previously impacted vehicle production across both four-wheeler and two-wheeler segments. The industry is now focusing on developing magnet-free motor technologies, with several startups working on innovative solutions. Minda also mentioned Chile and Australia as potential alternative sources for rare earth materials.

Government Support and Industry Outlook

The ASSOCHAM President noted that while the government is providing Production Linked Incentives (PLI) to support the sector, addressing supply chain challenges would take time.

"We are trying to see how we can reuse those already existing. We are all working on magnet-free motors with new technologies. These are the mitigations, but it is going to take some time," Minda said.

The auto component industry remains optimistic about finding sustainable technological solutions to overcome current disruptions while capitalising on the improved demand environment. (ANI)Disclaimer: Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.

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