The Indian automotive industry is expected to be the world’s seventh-largest automobile market by 2016 and the third largest by 2030, only behind China and the US. India is the world’s fourth-largest commercial vehicle (CV) market, while it is ranked as the fifth-largest bus and truck market in terms of volume. India is also stated to be the world’s second-largest two-wheeler market. The growing availability of small and affordable cars has helped expand the passenger vehicle (PV) market in India.
India is estimated to become the sixth-largest PV market and the fifth-largest PV producer in the world by 2014. Passenger cars, accounting for 88.5 per cent of the total PVs produced, grew at a compound annual growth rate (CAGR) of 15.3 per cent in 2009–2010. This segment is expected to grow at 12–13 per cent in 2010–11. The development of the US$ 2,250 Nano by Tata Motors’ revolutionised the industry by creating a new ultra low-cost car (ULCC) segment and India’s first electric car, Reva showcased India’s ability to innovate and design.
Two-wheeler exports from India have grown at a CAGR of around 25.2 per cent between 2004–05 and 2009–2010, crossing the one-million mark in 2009. Foreign players such as BMW, Harley Davidson and Ducati have ventured into the Indian market with a range of high-end motorcycles.
Between April 2000 and August 2010, cumulative FDI inflow to the automotive sector, including both automobile and auto components, totaled US$ 4,710 million. Moreso, the leading global carmakers such as Honda, Volkswagen, Mercedes and Ford are now shifting their manufacturing plants and units from China to India. The number of global players moving to India has been increasing on the back of the Government of India (GoI) permitting 100 per cent foreign equity investments.Sectoral Presentation (November 2010)
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