Economic Survey 2022: Over 7 lakh car orders pending due to chip shortage

Due to problems with supply chains, many different industries have shut down or curtailed production.

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The Economic Survey reported that carmakers had backlogged over 7 lakh orders by December 2021 because of the shortage of semiconductors.

As a result of the delay in supply, the average lead time (the gap between the date of order and when the automobile actually ships) for the industry in 2021 was approximately 14 weeks.

Economic Survey 2021-22 highlighted similar trends in the automobile sector in India as well. The Society of Indian Automobile Manufacturers (SIAM) reported that, in December 2021, carmakers sold 2,19,421 passenger vehicles in the domestic market, a 13% decrease in sale compared to 2020.

The survey also noted, "This is not a demand problem but a supply-side issue. The information from various car manufacturers' websites reveals a cumulative pendency of over 7 lakh orders as of December 2021." 

Government efforts are being undertaken to boost semiconductor production in the country, according to the Survey. For the development of the semiconductor and display manufacturing ecosystem, the government has allocated Rs 76,000 crore.

Government intervention to boost this industry comes at a time when severe disruptions in supply chains are causing an acute shortage of semiconductors in the global economy, the Survey noted.

Companies from several different industries have shut down or curtailed production due to breakdowns in supply chains, the report said.

With inputs from PTI