India’s automakers and parts suppliers are bracing for a slowdown in production and assembly-line disruptions as the Iran war disrupts gas supplies, threatening growth in the world’s third-largest car market.
Some parts suppliers to India’s major carmakers such as Maruti Suzuki India Ltd., Tata Motors Group and Mahindra & Mahindra Ltd. are reporting gas shortages to power operations, according to two dozen executives at car companies, part makers and dealers — an early sign that supply chain issues are emerging.
The disruption comes at a time when India’s car demand is growing at record levels, with sales expected to cross 4.5 million units in the current fiscal year to March 31, leaving little excess inventory with manufacturers and dealers.
“At this point it is about survival. First and foremost, we need to ensure that production continues. The buffer stock will not last long,” said a senior executive of a major carmaker.
India most affected by Iran war
India is heavily dependent on the Middle East for energy supplies, importing 50% of its natural gas needs from Qatar, which has been forced to close its refinery after a wave of Iranian attacks. Shipments of oil and gas through the Strait of Hormuz have also declined following Iranian attacks on ships.
While India is working to secure gas from the US, Norway and Russia, the government has prioritized supplies for households rather than factories. The fuel is important in auto sector plants, high-heat processes like forging and casting, and in paint shops.
Suppliers Reuters spoke to in India’s western and northern car manufacturing regions said production would be managed until the end of March. But the system is showing strain, with at least four executives saying Tata and Mahindra are operating some factories below capacity.
Mahindra said in a statement that the company has not lost any production this month compared to its “plan so far”, while a Tata Motors spokesperson said operations at its plants are “almost normal”. Tata Motors said it is working with suppliers to ensure continuity and optimize production where necessary.
Small and medium manufacturing units, which form the backbone of the car industry, are the most vulnerable, as they are more dependent on gas and unable to quickly switch to other sources.
Iron castings supplier Kirloskar Ferrous Ltd told stock exchanges it has stopped some production at a factory in western India “until further notice”.
Metal producer Hindalco Industries Ltd declared force majeure last week, warning some of its customers of possible disruptions amid a gas shortage.
Both the companies consider Mahindra as their customer. Mahindra did not comment directly about the two suppliers, but said its teams were working on the supply chain and taking action as necessary.
production on schedule
Automakers are working in a state of high-alert diplomacy with their suppliers to keep assembly lines running, and have not yet officially cut production schedules.
“We have received some information about challenges in energy supply for our in-house and our suppliers’ production operations,” said Rahul Bharti, senior executive officer, corporate affairs, Maruti Suzuki. “At the moment, our operations are going as planned,” he told Reuters.
S&P Global Mobility has already started downgrading its India outlook, now forecasting light vehicle production growth of 6.3% for 2026, down from 7.4% estimated before the war. “We may need to revise the forecast further depending on when the conflict ends,” said S&P’s Gaurav Wangal.