The Indian automotive industry is expected to reach US$ 300 billion by 2026. India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy trucks manufacturer in the world.
India’s annual production of automobiles in FY21 was 22.65 million vehicles, and 13 million vehicles were produced between April-October 2021.
For the calendar year (CY) 2021, all segments showed growth, and total sales increased by 5.8% to 18.49 million units, compared to 17.47 million units in January-December 2020.
In CY21, passenger vehicles sales increased by 26.6% to 3.08 million units, up from 2.43 million units in CY20. The total number of commercial cars sold was 677,119, up 34% from 505,102 in the previous year.
Passenger vehicle sales stood at 761,124 units for Q3 FY22.
In January 2022, total production of passenger vehicles*, three-wheelers, two-wheelers and quadricycles reached 1,860,809 units.
In December 2021, the luxury car market registered sales of 2,259 units, a YoY growth of 19.7%, with Mercedes Benz being the highest-selling luxury car manufacturer.
Automobile exports reached 4.13 million vehicles in FY21, growing at a CAGR of 3.47% during FY16-FY21. Two wheelers (79.38%), passenger vehicles (9.79%) and three wheelers (9.52%) made up the majority of exports from India. The Indian automotive industry is targeting to increase export of vehicles by five times during 2016-26.
To keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry attracted Foreign Direct Investment equity inflow (FDI) worth US$ 30.78 billion between April 2000-September 2021, accounting for 5.49% of the total equity FDI during the period.
In Q3 FY22, electric vehicle (EV) sales reached a new high of 5,592 units. Overall, in 2021, 329,190 EVs were sold in India, indicating a 168% YoY growth over last year’s sales of 122,607 units.
In the year 2021, spending on electrical architecture development, such as battery development, electrification, e-motors and power electronics, came up to Rs. 48,215 crores (US$ 6.39 billion).
Investment flow into EV start-ups in 2021 touched an all-time high, increasing nearly 255% to reach Rs. 3,307 crore (US$ 444 million). EV startups that attracted maximum funding in 2021 were Ola Electric (US$ 253 million), Blusmart (US$ 25 million), Simple Energy (US$ 21 million), Revolt (US$ 20 million) and Detel (US$ 20 million).
According to a study by Castrol, for an average Indian consumer, a price point of Rs. 23 lakh (or US$ 31,000), a charge time of 35 minutes and a range of 401 kilometres from a single charge will be the 'tipping points' to get mainstream EV adoption. The electric vehicles industry is likely to create five crore jobs by 2030.
According to NITI Aayog and Rocky Mountain Institute (RMI), India's EV finance industry is likely to reach Rs. 3.7 lakh crore (US$ 50 billion) by 2030. A report by India Energy Storage Alliance estimated that the EV market in India is likely to increase at a CAGR of 36% until 2026. In addition, projection for the EV battery market is expected to expand at a CAGR of 30% during the same period. A cumulative investment of Rs. 12.5 trillion (US$ 180 billion) in vehicle production and charging infrastructure would be required until 2030 to meet India’s EV ambitions.
In November 2021, Indian Oil Corporation (IOC) and two other public sector oil firms announced that they will install 22,000 EV charging stations in India over the next 3–5 years.
The Government aims to develop India as a global manufacturing and research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as the National Automotive Board to act as facilitator between the Government and the industry. Under (NATRiP), five testing and research centres have been established in the country since 2015.
Automotive Mission Plan 2016-26 is a mutual initiative by the Government of India and Indian automotive industry to lay down the roadmap for development of the industry.
In February 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways, revealed plans to roll out Bharat NCAP, India’s own vehicle safety assessment program.
In February 2022, 20 carmakers, including Tata Motors Ltd, Suzuki Motor Gujarat, Mahindra and Mahindra, Hyundai and Kia India Pvt. Ltd, were chosen to receive production-linked incentives (PLI) as part of the government's plan to increase local vehicle manufacturing and attract new investment. The 20 automobile companies have proposed a total investment of around Rs. 45,000 crore (US$ 5.95 billion).
In the Union Budget 2022-23, the government introduced a battery-swapping policy, which will allow drained batteries to be swapped with charged ones at designated charging stations, thus making EV’s more viable for potential customers.
In September 2021, the Indian government issued notification regarding a PLI scheme for automobile and auto components worth Rs. 25,938 crore (US$ 3.49 billion). This scheme is expected to bring investments of over Rs. 42,500 (US$ 5.74 billion) by 2026, and create 7.5 lakh jobs in India.
In August 2021, Prime Minister Mr. Narendra Modi launched the Vehicle Scrappage Policy, which aims to phase out old polluting vehicles in an environmentally-safe manner.
In July 2021, India inaugurated the NATRAX, which is Asia’s longest high-speed track and the fifth-largest in the world.
The Indian auto industry is expected to record strong growth in 2022-23, post recovering from effects of COVID-19 pandemic. Electric vehicles, especially two-wheelers, are likely to witness positive sales in 2022-23.
