Fortune India Exclusive: Govt urges auto sector to cut oil dependence, shift to electric energy amid West Asia supply shock

Amid escalating supply disruptions triggered by the ongoing West Asia conflict, the Ministry of Heavy Industries (MHI) has nudged the domestic automotive industry to accelerate a shift away from oil-based fuels and adopt more energy-efficient production practices.

In a communication to the Automotive Component Manufacturers Association of India (ACMA) and the Society of Indian Automobile Manufacturers (SIAM), the ministry outlined a set of measures aimed at insulating the sector from volatile energy supplies and input shortages.

Positioned as a formal advisory, the directive opens with a broader policy context. “I am directed to state that, in line with the Government’s ongoing efforts to enhance energy efficiency in the industrial sector in the wake of the prevailing West Asia/Middle East crisis, it is requested that the automotive industry may be advised to undertake the following measures,” as per the directive.

At the core of the advisory is a push to reduce dependence on fossil fuels within factory operations. “Wherever technically feasible, a transition from oil-based fuels to electricity may be considered.”

Alongside energy transition, the ministry has stressed the need for operational efficiency across manufacturing units. It noted that “production schedules may be optimized to minimize idle and standby fuel consumption,” targeting energy wastage during non-productive machine runtime.

The directive also addresses raw material pressures, particularly around aluminium availability. “Automotive industry may also be encouraged to explore the possibility of using recycled aluminum, wherever technically feasible.”

Further, companies have been urged to diversify material usage in non-critical applications to ease demand stress. “Automotive industry may be requested to explore the use of alternate materials such as HDPE, uPVC, UHSS, and GFRP composites in packaging and other non-critical aluminum applications.”

The ministry clarified that such substitutions should be calibrated to ensure quality is not compromised, adding that this approach is “aimed at reducing demand pressure on aluminum during the current shortage period, without affecting end-product performance, wherever technically feasible.”

According to auto industry observers, the advisory signals a coordinated attempt by the government to shield the auto sector from geopolitical disruptions while nudging it toward more energy-efficient and resource-optimised manufacturing practices.