The auto sector accounts for nearly half of India's manufacturing output

Highlights Passenger vehicle sales fell 18.4 per cent in the first quarter

June passenger vehicle sales fell by the biggest margin in 18 years

India's economic growth fell to a five-year low earlier this year

The auto parts industry could be forced to slash a fifth of its 5 million (50 lakh) or so workforce if the slowdown in vehicle sales continues, the president of the country's largest industry group for auto parts makers said.

India's auto industry is in the middle of one of its worst slumps. Passenger vehicle sales fell 18.4 per cent in the first quarter, and monthly passenger vehicle sales in June fell by the biggest margin in 18 years.

The slump has prompted automakers to cut production and automakers and parts makers to cut jobs.

The drop in production "has led to a crisis like situation in the auto component sector," Ram Venkataramani, president of the Automotive Component Manufacturers Association of India (ACMA), said in a statement late on Wednesday. "If the trend continues, an estimated 1 million people could be laid-off."

The slump in the auto sector, which accounts for nearly half of India's manufacturing output, has been a major factor behind the slide in economic growth to a five-year low earlier this year.

Mr Venkataramani said investments in the auto sector have been frozen due to a lack of government clarity on its electric vehicles (EVs) policy. He said a government plan to speed up the rollout of EVs would raise import bill and damage prospects for auto components manufacturers.

Mr Venkataramani also called for a cut in the goods and services tax for the vehicles and auto component sector.

