Last Updated: February 27, 2020
Last Updated: December, 2019
The automobile industry in India is world’s fourth largest, with the country currently being the world's fourth largest manufacturer of cars and seventh largest manufacturer of commercial vehicles in 2018. 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 FY19. Overall, Domestic automobiles sales increased at 6.71 per cent CAGR between FY13-18 with 26.27 million vehicles being sold in FY19. Indian automobile industry has received Foreign Direct Investment (FDI) worth US$ 23.51 billion between April 2000 and September 2019. Five per cent of total FDI inflows to India from April 2000 to June 2019 went into the automobiles sector.
Domestic automobile production increased at 6.96 per cent CAGR between FY13-19 with 30.92 million vehicles manufactured in the country in FY19.
In FY19, commercial vehicles recorded the fastest pace of growth in domestic sales at 17.55 per cent year-on-year, followed by three-wheelers at 10.27 per cent year-on-year.
The passenger vehicle sales in India crossed the 3.37 million units in FY19 and is further expected to increase to 10 million units by FY20. Passenger vehicle exports is estimated to touch about 6,90,000 units in 2019-20.
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. 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 Scheme which had been approved by Project Implementation and Sanctioning Committee (PISC) on 3rd January 2019.
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. The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for introduction of electric vehicles (EVs) in their public transport systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The first phase of the scheme has been extended to March 2019 while in February 2019, the Government of India approved the 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. Investment flows into electric vehicles start-ups in 2019 (until the end of November) increased nearly 170 per cent to reach US$ 397 million. Under FAME II, Government has sanctioned 5,595 e-buses in 64 cities in 26 states for inter-city and intra-city operations. Under the scheme 2,636 charging stations in 62 cities across 24 States/UTs were sanctioned.
Overall automobile exports increased by 14.50 per cent year-on-year in FY19 and during April-December 2019, overall export increased by 3.9 per cent. It is expected to grow at a CAGR of 3.05 per cent during 2016-2026.
Domestic two-wheeler industry is expected to grow at 8-10 per cent during FY19. Also, luxury car market in India is expected to grow at a 25 per cent CAGR till 2020. The Government of India expects automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023. India will be part of Global Automotive Triumvirate - the global Big 3 in coming 20 years and will also exceed the Indian automotive sales from US market by mid 2030s.
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Last Updated: February 27, 2020
india is expected to become the third largest market for electric vehicles by 2025 at 2.5 million vehicles.
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