Mumbai, August 22: Due to a major slump in demand, a slowdown has hit several industries, which is leading to massive job cuts in India. From biscuits to cars, Indian companies across industries are desperately fighting the weak economic situation in the country. According to a Reuters report, nearly 10 lakh people working in the automobile sector are on the verge of losing their jobs. The industry is reportedly in the middle of one of its worst slumps and has already witnessed more than 2 lakh job cuts over the past three months. Indian Economic Slowdown Hits Auto Sector, Over 3.5 Lakh Employees Laid Off Since April 2019.
Biscuit makers are seeing a dip in demand after the imposition of 18 percent GST, which has forced them to hike prices. The situation is the same across industries, where company heads are forecasting severe job cuts in the near future if the situation doesn't improve.
Let's take a look at the grim situation which iconic Indian companies are facing and what is forcing them to slash jobs:
The country's largest biscuit maker Parle Products has recently announced that things are not going well for the company. On Tuesday, the company said that they may have to let go of 8,000-10,000 people if the ongoing consumption and slowdown persists. The 18 percent GST has forced the company to hike prices which have been affecting their sales. Parle May See 10,000 Job Cuts Due to 18% GST Affecting Biscuit Sales.
According to an ET Retail News, Mayank Shah, Category Head of Parle has been quoted as saying, “We have sought reduction in the goods and services tax (GST) on biscuits priced at Rs 100 per kg or below, which are typically sold in packs of Rs 5 and below, but if the government doesn’t provide that stimulus, then we have no choice but to let go of 8,000-10,000 people from our workforce across factories as slowing sales are severely impacting us."
Similar concerns were raised by another biscuit and dairy maker Britannia Industries. Britannia managing director Varun Berry had highlighted last week that consumers are hesitating in buying Rs 5 packs of biscuits. At a post-earnings conference call, Berry had said that consumers are thinking twice before buying even a Rs 5 worth of product, indicating a “serious issue in the economy”.
Over 3,000 temporary employees have lost jobs with the country's largest carmaker Maruti Suzuki India due to the ongoing slump in the automobile industry. The company has stopped renewing contracts of such employees due to the continuing slowdown in the Indian auto industry.
The company has, however, insisted that permanent employees have not been affected by the job cuts in the company. Maruti further stated that contract workers will be hired when the demand for the products increase in the future.
Mahindra & Mahindra:
Mahindra & Mahindra has laid off 1,500 temporary workers and will slash more jobs if the situation continues to be the same. The company further sees a "huge danger" of job losses in the ailing domestic auto sector and has sought government intervention, including tax reductions, to revive demand.
Taking note of the current situation, Union Finance Minister Nirmala Sitharaman has asked business chambers and industries to produce the exact number of job cuts to derive the correct picture of the economy. The Ministry of Finance has asked the industries to abstain from causing panic. However, such iconic Indian companies speaking out about the current economic crisis, the situation looks grim.