Construction company Vedanta has issued a report that warns that a $500bn deal to buy Indian automaker Mahindra & Nissan is the biggest failure in the history of auto manufacturing in India.
The report, based on analysis of industry data and projections from Vedanta, says the deal will result in a loss of 1,400 jobs, with most of the losses coming from manufacturing and other services, such as sales, engineering, and other logistics services.
It notes that the combined manufacturing and services losses of $500 billion are expected to make up about 2% of India’s GDP by 2020.
Vedanta estimates that the loss will be between $1 and $1.5bn, with the biggest losses coming in manufacturing and the service sector.
Its report is the second by Vedanta to be issued by the group, after it published a detailed report on India’s manufacturing sector in August 2016.
The previous report found that manufacturing employment in India was expected to grow to 4.5% of the total by 2020, but the country has seen a sharp drop in manufacturing jobs over the past few years, and Vedanta expects it to drop to 1.5%.
Vidanta’s report, released in November, found that the country had just over 3 million auto assembly workers, with 2.4 million of them working in the auto sector.
The company also said that auto sector output has fallen from 3.7% of GDP in 2015 to 2.1% in 2019.
In its report, Vedanta noted that the auto industry was the biggest single industry in the country, with almost 60% of its workforce, and the biggest employer in India with 6.7 million.
The report estimated that the sector is expected to add 1.2 million jobs by 2020 and 1.4 jobs a day by 2025.
According to the report, the total value of the automotive industry in India is expected, in 2021, to be around $2.7 trillion.