Worker Shortages Impact 61% of Indian Auto-Component Makers Amid EV Transition

India's automotive sector is navigating a dual workforce challenge: expanding its manufacturing base while equipping workers with the sophisticated skills required for next-generation vehicles. According to a recent survey by BCG-ACMA, 61 per cent of auto-component makers already identify manpower shortages as one of their biggest operational disruptions.

The skill mismatch is particularly acute deeper in the supply chain. While large original equipment manufacturers (OEMs) and Tier-1 suppliers maintain greater capacity to spend on training, automation, and retention, smaller Tier-2 and Tier-3 companies struggle to absorb rising manpower costs while investing in new capabilities. Despite the automobile industry spending an estimated ₹1,000 crore annually on skilling—fragmented across internal training, CSR programmes, and apprenticeships—emerging technologies demand expensive expertise in high-voltage systems, batteries, power electronics, mechatronics, robotics, AI, and software.

Major automakers have already reported production bottlenecks due to these shortages. Mahindra & Mahindra’s Rajesh Jejurikar noted that three or four key suppliers were impacted badly during the April-June quarter. Similarly, Bajaj Auto CFO Dinesh Thapar described labour availability as exceptionally pronounced, contributing to production opportunity losses alongside other factors. TVS Motor CEO K.N. Radhakrishnan added that while Tier-1 suppliers are managing labour availability, many Tier-2 suppliers face serious problems, with blue-collar churn and management attrition running high at 18 to 20 per cent.

The regional deficit is starkly visible in Pune, an automotive ecosystem employing about 1.6 lakh people. The city requires approximately 27,000 new skilled workers annually for growth, vacancies, and attrition. However, local training institutions like ITIs, polytechnics, and ASDC centres offer only about 13,500 auto-relevant seats, with enrolment and graduation rates yielding just 5,000 completed trainees.

Beyond headcounts, finding personnel with the right technical profile remains difficult. Advanced EV and digital manufacturing training requires specialized laboratories, equipment, instructors, and frequently refreshed curricula that smaller suppliers cannot easily finance individually. Consequently, three out of four component makers surveyed are seeking support on skilling and training.

To address these systemic gaps, Automotive Skills Development Council Chairman Vinkesh Gulati has proposed a National Automotive Skill Mission and an Automotive Future Skill Fund to Heavy Industries Minister H.D. Kumaraswamy. Meanwhile, nine out of ten companies surveyed are investing in automation to counter labour constraints. However, industry analysts note that automation changes rather than eliminates the challenge, as the remaining workforce requires higher technical skills to operate and maintain sophisticated equipment.

Furthermore, research by ICCT-IIM Bangalore estimates that the EV transition could support 7.2 million direct manufacturing jobs by 2040, provided battery cells are made domestically. The employment balance turns positive only once domestic battery manufacturing crosses 25 per cent; otherwise, electrification risks displacing more manufacturing jobs than it creates.

"The current labour shortage in the auto-component sector highlights a structural bottleneck in India's manufacturing ecosystem. While large OEMs can absorb the costs of automation and internal training, Tier-2 and Tier-3 suppliers form the backbone of the supply chain and require urgent institutional support. Bridging the gap between traditional vocational training and advanced EV requirements through initiatives like pooled training infrastructure and targeted skill missions will be crucial for sustaining the growth of India's automotive and electric vehicle sectors." — Dr. Shishir Gupta, Founder & CEO, StartupLanes