Indian Automobile Industry Analysis: A Sectoral Report | IBEF

The automobile industry in India is world’s fourth largest, with the country currently being the world's 4th largest manufacturer of cars and 7th largest manufacturer of commercial vehicles in 2017. Indian automotive industry (including component manufacturing) is expected to reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers dominate the industry and made up 81 per cent share in the domestic automobile sales in FY18. Overall, Domestic automobiles sales increased at 7.01 per cent CAGR between FY13-18 with 24.97 million vehicles getting sold in FY18. Indian automobile industry has received Foreign Direct Investments (FDI) worth US$ 18.76 billion between April 2000 and March 2018.

The passenger vehicle sales in India crossed the 3.2 million units in FY18, and is further expected increase to 10 million units by FY20. Auto sales in Q1 FY19 witnessed a year-on-year growth rate of 18.1 per cent across segments, driven by a 19.91 per cent growth in passenger vehicle sales. Overall exports in Q1 FY19 increased 26.73 per cent year-on-year.

The government aims to develop India as a global manufacturing as well as a research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as a National Automotive Board to act as facilitator between the government and the industry. The Indian government has also set up an ambitious target of having only electric vehicles being sold in the country. Indian auto industry is expected to see 8-12 per cent increase in its hiring during FY19.

Alternative fuel has the potential to provide for the country's energy demand in the auto sector as the CNG distribution network in India is expected to rise to 250 cities in 2018 from 125 cities in 2014. Also, the luxury car market could register high growth and is expected to reach 150,000 units by 2020.