Commerce Dashboard
Automobile
India's electric vehicle (EV) market is estimated to be a Rs. 50,000 crore (US$ 7.09 billion) opportunity by 2025, with two- and three-wheelers expected to drive higher electrification of the vehicles.

Indian Automobile Industry Analysis

    Last updated on Mar, 19 2021

The automobile industry in India is the world’s fourth largest. India was the world's fourth largest manufacturer of cars and seventh largest manufacturer of commercial vehicles in 2019. Indian automotive industry (including component manufacturing) is expected to reach Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. The industry attracted Foreign Direct Investment (FDI) worth US$ 24.5 billion between April 2000 and June 2020 accounting for ~5% of the total FDI during the period according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

Domestic automobile production increased at 2.36% CAGR between FY16-FY20 with 26.36 million vehicles being manufactured in the country in FY20. Overall, domestic automobiles sales increased at 1.29% CAGR between FY16-FY20 with 21.55 million vehicles being sold in FY20.

Two wheelers and passenger vehicles dominate the domestic Indian auto market. Passenger car sales are dominated by small and mid-sized cars. Two wheelers and passenger cars accounted for 80.8% and 12.9% market share, respectively, accounting for a combined sale of over 20.1 million vehicles in FY20.

Overall, automobile export reached 4.77 million vehicles in FY20, growing at a CAGR of 6.94% during FY16-FY20. Two wheelers made up 73.9% of the vehicles exported, followed by passenger vehicles at 14.2%, three wheelers at 10.5% and commercial vehicles at 1.3%.

The electric vehicle (EV) market is estimated to be a Rs. 50,000 crore (US$ 7.09 billion) opportunity in India by 2025. Several technology and automotive companies have expressed interest and/or made investments into the India EV space. Auto companies such as Hyundai, MG Motors, Mercedes, and Tata Motors, have launched EVs in the market. A recent study conducted by Castrol found out, most of Indian consumers would consider buying an electric vehicle by the year 2022. The study also highlighted for an average Indian consumer, price point of Rs. 23 lakh (or US$ 31,000), a charge time of 35 minutes and a range of 401 kilometers from a single charge will be the 'tipping points' to get mainstream EV adoption

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 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. NATRiP’s proposal for “Grant-In-Aid for test facility infrastructure for Electric Vehicle (EV) performance Certification from NATRIP Implementation Society” under FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme was approved by Project Implementation and Sanctioning Committee (PISC) on January 03, 2019.

The Indian Government has also set up an ambitious target of having only EVs being sold in the country. The Ministry of Heavy Industries, Government of India, has shortlisted 11 cities in the country for introduction of EVs in their public transport system under the FAME scheme. The first phase of the scheme was extended to March 2019 while in February 2019, the Government approved FAME-II scheme with a fund requirement of Rs. 10,000 crore (US$ 1.39 billion) for FY20-22. Under Union Budget 2019-20, Government announced to provide additional income tax deduction of Rs. 1.5 lakh (US$ 2146) on the interest paid on the loans taken to purchase EVs.

EV sales, excluding e-rickshaws, in India witnessed a growth of 20% and reached 1.56 lakh units in FY20 driven by two wheelers.

The Government of India expects automobile sector to attract US$ 8-10 billion in local and foreign investment by 2023.

Indian Automobile Industry Report (January, 2021)
Download PDF Download PDF  (Size: 756.81 KB )

Click to access the Automobile Industry Archived Report

Posters

Brand India Pharma

REVVING UP

india is expected to become the third largest market for electric vehicles by 2025 at 2.5 million vehicles.

+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

Agri Export Policy - Towards smoother trade, wider global presence

English

+ More Publications >

IBEF Publication

IBEF Blog - INDIA ADDA – PERSPECTIVES ON INDIA More

'Monetise and Modernise' is the PM's mantra for govt. assets
IBEF, Knowledge Centre

In the FY2021-22 Union Budget, the Government of India announced an ambitious divestment target...

MoU between France and India to Boost the Local Renewable Energy Market
IBEF, Knowledge Centre

Introduction
In March 2021, the Union Cabinet of India approved a memor...

Vehicle Scrappage Policy 2021: Expectations and Challenges
IBEF, Knowledge Centre

Overview
The vehicle scrappage policy is a government-funded programme ...

Revitalising 'India's Smart City Mission'
IBEF, Knowledge Centre

Introduction
The ‘Smart City Mission' is a revolutionary proj...

India's handicraft crafts: A sector gaining momentum
IBEF, Knowledge Centre

Overview
The handloom and handicraft industry has been the backbone of ...

Healthy India's "Aatmanirbhar Swasth Bharat Yojana"
IBEF, Knowledge Centre

Overview
The government’s objective to strengthen the healthcare ...

ideas Ideas More

Ideas

Zomato: Top Of The Food Chain
Zomato, an Indian start-up is in the business of online food ordering. It initially launched Foodiebay.com in Gurugram in 2008, a website that scanned menus and provided ratings and recommendations on....

JOIN IBEF.org

Join IBEF.org now. Enjoy FREE subscriptions downloads, updates and more.

Error

Already a member?
Login / Retrieve Password