India Is The World’s Largest Manufacturer of Two Wheelers, Tractors And Three-Wheelers. It Is The Second Largest Bus Manufacturer And The Third Largest Manufacturer Of Heavy Trucks.

The sale of passenger vehicles increased by 2.70%, two-wheelers by 4.86% and three-wheelers by 10.27% in FY 2018-19.

26 million vehicles were manufactured in April-March 2020 of which 4.7 million were exported.

India is expected to be the world’s third-largest automotive market in terms of volume by 2026.

The US$ 118 billion Automobile Industry is expected to reach US$ 300 billion by 2026.

India aims to reduce its carbon footprint by 33-35% by 2030.

The EV market is expected to grow at CAGR of 44% between 2020 and 2027.

India understands that the future is electric. The EV market is expected to grow at CAGR of 44% between 2020 and 2027 and is expected to hit 6.34-million-unit annual sales by 2027. The EV industry will create five crore direct and indirect jobs by 2030. A market size of US$ 50 billion has been identified for the financing of Electric Vehicles in 2030. This is about 80% of the current size of India’s retail vehicle finance industry, currently estimated to be US$ 60 billion.

India aims to reduce its carbon footprint by 33-35% by 2030. The Delhi government is gearing up to introduce 1,000 electric buses by the end of 2021, in a bid to improve air quality. Delhi is the only state where the entire public transport runs on CNG. The government is aiming at a rollout of 900-1,000 electric buses on Delhi’s roads by the end of 2021.

The Indian government has taken significant steps to support the growth of the automobile sector, some of which is captured the following developments:

  • 100% FDI has been allowed under automatic route. The automobile sector attracted US$ 24.5 billion FDI during April 2000 - June 2020, accounting for 5.1% of the total FDI inflows.
  • The Production-Linked Incentive (PLI) Scheme has been introduced in the Automobile and Auto Components sectors for Enhancing India’s Manufacturing Capabilities and Enhancing Exports under the Atmanirbhar Bharat Programme.
  • India accounts for 40% of total US$ 31 billion of global engineering and R&D spend. 8% of the country’s R&D expenditure is in the automotive sector.

he automotive sector has seen tremendous growth in the recent decades. A spike in the growth of global automobile Original Equipment Manufacturers (OEMs) operating in the country has made India the preferred designing and manufacturing base of many MNCs whilst leading to a spurt in the number of local manufacturing units.

Auto Components industry exports are expected to grow at an annual rate of 23.9%. The industry will grow fromUS$ 15.2 billion to US$ 80 billion by 2026. The US$ 57 billion Auto Components industry in India is expected to grow to US$ 200 billion by 2026. The Aftermarket segment which includes tyres, batteries and brake parts is expected to reach US$ 32 billion by 2026 from US$ 10.1 billion at present.

Some significant developments that have recently taken place in the sector include:

  • Tata Motors-owned Jaguar Land Rover announced plans to become a net zero carbon business by 2039. Its Jaguar brand will become an all-electric luxury vehicle marque from 2025.
  • The state-owned Indian Oil Corporation (IOCL) and Israeli battery developer Phinergy have formalized a joint venture (JV) to manufacture ultra-lightweight metal-air batteries for electric vehicles (EVs).
  • Fiat Chrysler Automobiles will invest US$ 150 million to set up FCA ICT India, a new Global Digital Hub in Hyderabad. FCA’s new innovation and technology development facility is the company’s largest Digital Hub outside of North America and EMEA.
  • Swedish automotive safety supplier company, Autoliv Inc is setting up its manufacturing plant in Tamil Nadu at an investment of about US$ 14 million.
  • Elon Musk-led Tesla has registered a subsidiary company in India. India plans to offer US$ 4.6 billion in incentives to companies setting up advanced battery manufacturing facilities.
  • Daimler India plans to have at least 350 dealerships pan-India in the next two years, after having recently set up 10 new touchpoints in the country. The Indian Automobile sector, with its cutting-edge technology, a thriving domestic market, strong forward and backward linkages and sustained institutional support is set to cross many milestones ahead, and it is firing on all cylinders towards the same.