Behind the 15% Production Cut: Indian Automotive Industry Has Jobs but No Workers

The Indian automotive industry has been shaken by a recent set of data disclosed by Mahindra & Mahindra: due to a shortage of labour among its suppliers, its SUV production has been cut by up to 15%.

This is not an isolated case.

Tata Motors and Bajaj Auto, while simultaneously expanding their electric and internal combustion engine vehicle product lines, are also severely constrained by a shortage of skilled talent.

As the wave of electrification sweeps the globe, India, a major automotive nation long reliant on manufacturing and employment, is encountering an unexpected bottleneck: it's not a lack of people, but a lack of 'employable' people.

The Automotive Skills Development Council (ASDC) in India hits the nail on the head, stating that the core issue is not a total shortage of manpower, but a lack of 'ready-to-deploy' technical talent.

From Chakan near Pune to the automotive clusters in Chennai, suppliers of critical components like wiring harnesses and advanced electronic parts are finding themselves in a predicament of 'having orders, but no engineers'. Behind this talent crisis lies the structural dilemma facing the Indian automotive industry amidst the waves of electrification and digitalisation.

The 'Disruptive Blow' of the Talent War: Why Can't Suppliers Retain Engineers?

The plight of traditional automotive suppliers stems firstly from an unequal battle for talent.

Engineers with expertise in electronics, battery systems, and automation are being poached with high salaries by tech companies, global engineering service firms, and multinational capability centres. As Tesla, Amazon, and various global R&D centres establish technical teams in India, traditional automotive parts suppliers have little to no leverage in terms of salary and brand appeal.

But salary isn't the only deciding factor.

Munira Loliwala, a human resources strategy consultant, points out that young engineers today are not only concerned about salary but also value work-life balance, career development opportunities, and location.

Large original equipment manufacturers (OEMs) have established employer brands and clear career progression paths, whereas suppliers, even when involved in cutting-edge technology development, often lack the same appeal.

Automotive clusters like Chakan also face issues such as poor infrastructure, long commutes, and housing shortages, further diminishing the willingness of talent to move there.

A deeper issue lies in the skills mismatch.

Chandrakant Alsundkar, an industrial relations expert, states bluntly that while suppliers need to produce future-oriented products, most of their current workforce does not yet possess the necessary capabilities.

The structure of electric and hybrid vehicles is becoming increasingly complex, significantly raising the technical requirements for key components like wiring harnesses and advanced electronics.

However, the skills produced by India's traditional Industrial Training Institutes (ITIs) are still centred on manufacturing processes from the internal combustion engine era – the industry has shifted onto the electrification track, but the talent pool remains stuck in the age of petrol and diesel cars.

From 'Auditor' to 'Symbiont': OEMs' Reactive Self-Rescue and the Industry's Long-Term Game

Faced with the direct impact of the supply chain talent gap on production, vehicle manufacturers are being forced to change their role.

In the past, the relationship between OEMs and suppliers was more of a hierarchical 'auditor and auditee' dynamic, where the OEM set standards, sent in audit teams, and inspected component quality.

Now, some OEMs have deployed manufacturing and quality experts to supplier plants on a long-term basis to help stabilise operations and resolve production bottlenecks; others have established dedicated logistics channels to ensure the timely delivery of critical components.

An industry insider told The Hindu Business Line: "OEMs have realised that if suppliers cannot attract, train, and retain talent, it will ultimately impact their own assembly lines." This marks a shift in the Indian automotive industry from traditional supply chain management towards a more proactive 'ecosystem' approach to collaborative governance.

However, this reactive, interventionist approach is ultimately just treating the symptoms, not the root cause. The industry is exploring more systematic solutions. The ASDC is leading efforts to expand training programmes and strengthen apprenticeship pathways, focusing particularly on developing skills in electric vehicle assembly, robotics, and advanced electronics.

India plans to invest in the localisation of key electric vehicle components, and OEMs are also accelerating the integration of technologies like automation, the Internet of Things, and predictive maintenance – all of which require a matching pool of technical talent.

The bigger challenge is the time window.

Building a training system takes years, yet the pace of industrial transformation is accelerating. When the growth curve of talent supply cannot keep up with the slope of change in industry demand, India's electrification ambitions will always face the hard constraint of a 'people shortage'.

The Indian automotive industry stands at a critical crossroads.

The electrification transition is not just an upgrade of production lines and technology; it is a systemic restructuring concerning 'people'. As the industry consensus becomes 'we used to rely on inventory to keep production going, now talent is just as critical', whether the Indian automotive industry can break through in this talent war will determine if it can truly secure a place in the global competition for electric mobility.