India enjoys a strong position in the global heavy vehicles market, being the largest producer of tractors, the second-largest manufacturer of buses, and the third-largest manufacturer of heavy trucks in the world. Domestically, the automobile sector is divided into four segments: two-wheelers, three-wheelers, passenger vehicles, and commercial vehicles, with two-wheelers and passenger vehicles dominating demand. In FY26, two-wheelers accounted for 76.79% of market share, while passenger vehicles held 16.43%, with sales largely driven by small and midsized cars. The Indian automotive industry is expected to reach US$ 300 billion by 2026.
Production and sales volumes in India remain strong. The total production of Passenger Vehicles*, Three Wheelers, Two Wheelers, and Quadricycle in March 2026 was ~2.98 million units and bringing the total production for FY26 to 34.71 million units. Two-wheelers and passenger vehicles dominate the domestic Indian auto market. Passenger car sales are dominated by small and midsized cars. Automobile exports from India rose 24% to over 6.7 million units in FY26, led by strong demand for passenger vehicles, two-wheelers, and commercial vehicles abroad.
The electric vehicle (EV) market in India is emerging as a significant growth driver. In FY26, India’s EV sales grew 30% to 2.66 million units, up from 2.05 million in FY25, achieving 8.62% penetration of total automotive sales, with two- and three-wheelers accounting for nearly 87% of EV volumes and penetration rising across major vehicle segments. The Indian EV market, valued at US$ 3.71 billion in 2025, is projected to reach US$ 191.04 billion by 2034, growing at a CAGR of 54.94% during 2026-34. Between 2020 and 2025, the sector attracted approximately Rs. 2.23 lakh crore (US$ 25.6 billion) in investments, while EV financing is projected to reach Rs. 4,00,000 crore (US$ 47.03 billion) by 2030, supporting significant industry expansion and job creation.
Despite this rapid growth, India’s automobile sector still has vast untapped potential. Car ownership in India remains significantly below developed markets such as the US, China, and Europe, where 80-90% of the population owns a car, compared to just around 8% in India. This gap presents immense growth prospects, particularly as rising incomes and expanding infrastructure fuel demand. Global automakers like Kia Motors and Volkswagen have adapted their products to suit the preferences of India’s large middle-class population, competing directly with domestic firms and making the market highly competitive. The Government of India also expects the sector to attract US$ 8-10 billion in local and foreign investments, reinforcing its growth trajectory. Additionally, the automobile sector received a cumulative equity FDI inflow of about Rs. 2,70,230 crore (US$ 40.31 billion) between April 2000-March 2026.
In May 2026, Maruti Suzuki commenced production at the second plant of its Kharkhoda facility, doubling the site’s annual capacity to 500,000 units and raising the company’s total production capacity to 2.65 million unit.
In May 2026, Force Motors announced plans to invest over Rs. 3,000 crore (US$ 317.9 million) to expand its product portfolio, develop hybrid powertrains and strengthen exports.
In May 2026, Hyundai Motor India announced plans to invest around Rs. 7,500 crore (US$ 794.7 million) in FY27 to expand production capacity and strengthen its SUV and EV portfolio.
In May 2026, Tata Motors Passenger Vehicles announced plans to invest around Rs. 10,000 crore (US$ 1.06 billion) over the next two years to support new product development, EV expansion and capacity addition.
In May 2026, Hero MotoCorp announced plans to invest over Rs. 1,500 crore (US$ 158.4 million) in FY27 to expand its scooter business and scale up EV production.
In May 2026, Ola Electric approved an investment of US$ 208.5 million to expand EV and battery-cell technology, increase localisation and support in-house cell production.
In May 2026, TVS Motor Company announced plans to invest around Rs. 3,500 crore (US$ 369.6 million) in FY27 to expand production capacity, product development and R&D.
On May 11, 2026, Toyota Motor Corporation announced plans to establish a new vehicle manufacturing plant in Maharashtra with an annual production capacity of 100,000 vehicles.
In April 2026, Vietnam-based Vingroup announced plans to invest Rs. 61,347 crore (US$ 6.5 billion) in Maharashtra across electric mobility, renewable energy, smart townships and public infrastructure.
In April 2026, Volkswagen introduced an updated Taigun in India, strengthening its mid-size SUV portfolio with refreshed features and positioning.
In April 2026, Renault announced plans to make India one of its top three global markets by 2030, targeting around 5% market share and seven model launches, including battery-electric vehicles.
In April 2026, Hyundai Motor and TVS Motor signed a Joint Development Agreement to jointly develop and commercialise electric three-wheelers for last-mile mobility in India and other markets
In March 2026, Honda Cars India announced plans to invest around Rs 1,200 crore (US$127.1 million) in a new EV manufacturing line at its Tapukara plant in Rajasthan for its upcoming electric SUV.
In March 2026, Škoda launched the updated Kushaq in India, introducing refreshed styling and feature upgrades to strengthen its position in the competitive mid-size SUV segment.
In March 2026, Renault launched the new-generation Duster in India, marking the return of the SUV nameplate and strengthening its presence in the mid-size SUV segment.
On February 16, 2026, JSW MG Motor India announced an investment of Rs. 3,000 crore (US$ 331.5) to expand its manufacturing capacity and support new vehicle launches in the country.
On February 12, 2026, Mahindra & Mahindra Limited invested Rs. 196 crore (US$ 23.6 million) to expand its Chennai-based R&D centre, strengthening capabilities in advanced vehicle design, engineering, and testing which aims to support next-generation platforms and reinforce India’s role as a key hub for automotive innovation.
On January 9, 2026, Germany-based Benteler Automotive expanded its India footprint by leasing industrial space in Pune’s Chakan area to strengthen production capacity and supply chain efficiency.
The PM E-DRIVE Scheme achieved its e-3W (L5) targets ahead of schedule, leading to discontinuation of incentives from December 26, 2025. The scheme enabled deployment of ~2.88 lakh e-3Ws and supported overall EV sales of over 21.24 lakh units.
On November 20, 2025, Maruti Suzuki India Limited inaugurated its 1,500th parts and accessories distributor touchpoint in Mumbai, expanding the network to cover approximately 760 cities and enhancing parts availability for millions of vehicles.
On October 15, 2025, Hyundai Motor India Ltd. (HMIL) announced an investment plan of Rs. 45,000 crore (US$ 5.07 billion) through FY30, aiming for 26 new launches (including 7 new nameplates), positioning India as a global export hub with target exports of up to 30% and revenue crossing Rs. 1,00,000 crore (US$ 11.28 billion) by FY30.
On September 2, 2025, Tata Motors broke ground on a new greenfield vehicle manufacturing facility in Panapakkam, Ranipet district, Tamil Nadu, set to produce next-generation cars and SUVs for Tata Motors and Jaguar Land Rover.
On August 26, 2025, India’s EV push included 14,028 e buses, 9,332 public charging stations, and over Rs. 54,000 crore (US$ 6.32 billion) in investments through PM E DRIVE and PLI schemes to boost domestic manufacturing and green mobility.
The Ministry of Heavy Industries has launched FAME- III Scheme, with a budget of Rs. 10,900 crore (US$ 1.29 billion) to promote electric mobility and reduce reliance on fossil fuels over a two-year period from April 1, 2024, to March 31, 2026.
On August 12, 2025, DPIIT signed an MoU with Hero MotoCorp to support early-stage startups via the ‘Hero for Startups’ accelerator, offering mentorship and R&D access.
On August 11, 2025, VinFast inaugurated its Rs. 16,000 crore (US$ 1.87 billion) EV assembly plant in Thoothukudi, Tamil Nadu, its first outside Vietnam, aiming to make the city a South Asian export hub with an initial capacity of 50,000 vehicles annually, scalable to 1.5 lakh units.
On August 2, 2025, Mahindra & Mahindra completed the acquisition of a 58.96% stake in SML Isuzu for Rs. 555 crore (US$ 64.9 million), aiming to expand its commercial vehicle market presence.
Tata Motors is set to invest Rs. 33,000-35,000 crore (US$ 3.86-4.10 billion) between FY26 and FY30 to bolster its passenger vehicle and electric portfolio, launching 30 new models, aiming for a 16% market share by FY27 rising to 18-20% by FY30, with Rs. 16,000-18,000 crore (US$ 1.87-2.11 billion) specifically allocated to the EV arm.
In July 2025, Maruti Suzuki India Limited has partnered with DPIIT, to support ‘Startup India’ innovators in mobility and manufacturing with mentorship, industry access, and testbed facilities to accelerate market-ready solutions.
On June 16, 2025, Maruti Suzuki India Limited (MSIL) entered into a Memorandum of Understanding with ESAF Small Finance Bank to provide retail financing solutions for new cars, used cars, and commercial vehicles.
In FY25, Mercedes-Benz sold 18,928 luxury cars, the highest in the segment. While BMW is the second highest in the segment, it sold 15,180 cars in the same year.
On February 2025, TVS Motor Company announced a Rs. 2,000 crore (US$ 236.6 million) investment in Karnataka over the next five years to enhance its presence in the state through new infrastructure and expanded capabilities.
In January 2025, Force Motors Ltd announced securing an order to supply 2,429 ambulances to Uttar Pradesh's Health Department, enhancing the region's medical services.
In October 2024, Hyundai Motor India raised a record Rs. 27,870 crore (US$ 3.26 billion) through what became India’s largest-ever IPO, achieved via a fully subscribed offer-for-sale.
PM E‑DRIVE, started in October 2024, is India’s umbrella scheme to accelerate EV adoption and ecosystem support with a Rs. 10,900 crore (US$ 1.31 billion) outlay, encompassing e‑2Ws, e‑3Ws, e‑buses, heavy EVs, public charging infrastructure, vehicle testing, and localisation, with its tenure extended to March 31, 2028.
In 2024, Kinetic Green raised Rs. 214 crore (US$ 25 million) from Greater Pacific Capital as part of a Series A round.
In October 2024, Tata Passenger Electric Mobility, a subsidiary of Tata Motors Limited and pioneer of India’s EV revolution (TPEM), along with the Rajasthan Solar Association (RSA), has entered a Memorandum of Understanding (MoU) to promote electric vehicles (EVs) and the use of solar energy for EV charging in Rajasthan.
In January 2024, Hyundai Motor India Ltd. finalized the acquisition and transfer of specified assets at General Motors India's Talegaon Plant in Maharashtra and inked an MoU with the Government of Maharashtra committing to an investment of US$ 722 million (Rs. 6,000 crore) in the state.
In January 2024, at the Vibrant Gujarat Global Summit, Maruti Suzuki announced the investment plans in Gujarat with a New Greenfield plant and a fourth line in SMG.
In December 2023, Tata Passenger Electric Mobility Ltd. (TPEM) and Bharat Petroleum Corporation Limited (BPCL) signed an MoU to jointly establish 7,000 public charging stations nationwide to enhance customer satisfaction.
In December 2023, Maruti Suzuki India Limited entered into an agreement with the Government of Haryana to establish the second Japan-India Institute for Manufacturing (JIM) as part of its corporate social responsibility (CSR) initiative. The company will invest US$ 698 thousand (Rs. 5.8 crore) to upgrade the existing ITI Kansala into a JIM.
In December 2023, Hero MotoCorp announced a partnership with Ather Energy for an interoperable fast-charging network in India which will cover 100 cities with over 1900 fast-charging points.
In November 2023, TVS Motor announced its entry into the European market through a distribution agreement with Emil Frey, a renowned automotive distribution company with a century-long legacy.
In November 2023, SAIC Motor and JSW Group announced a strategic joint venture to accelerate growth with focus on green mobility.
In October 2023, Hero MotoCorp inaugurated its first state-of-the-art premium dealership in India.
In October 2023, Tata Motors signed a definitive agreement to acquire a 27% stake in Freight Tiger, a software-as-a-service (SaaS) company, for US$ 17.99 million (Rs. 150 crore).
In July 2023, Renault Nissan to invest US$ 1,68,762.86 (Rs. 1.4 crore) to upgrade infrastructure at eight schools near Chennai.
In July 2023, Mahindra & Mahindra is in advanced talks with British International Investment (BII) and some other global investors to raise up to US$ 602.72 million (Rs. 5,000 crore) for its electric vehicles (EV) unit.
In June 2023, Tata Motors will invest US$ 2 billion towards developing new products and platforms over the next four years.
In June 2023, Hero MotoCorp to invest up to US$ 180.81 million (Rs. 1,500 crore) for developing premium bikes and EVs in India.
In March 2023, the Central government sanctions US$ 72.41 million (Rs. 800 crore) under FAME India Scheme Phase II to Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), for setting up 7,432 public fast charging stations across the country.
In February 2023, Nissan and Renault plan to invest US$ 600 million in India over the next 3-5 years to expand their market share in passenger cars and electric vehicles.
Tata Group Chairman, Mr. N Chandrasekaran said that "EV contribution in our portfolio is likely to increase to 25% in five years and reach 50% by 2030, thus significantly increasing investments in this sector“ in January 2023.
India’s automobile sector is entering a transformative phase, fuelled by strong domestic demand, a growing electric mobility ecosystem, and sustained policy and investment support. With rising production capacities, increasing exports, and rapid adoption of next-generation technologies, the industry is well-positioned to expand its global footprint. Looking ahead, India’s automotive market is set to become a key driver of innovation, sustainability, and inclusive growth, reinforcing the country’s role as a global mobility hub.
Notes: *Data except for BMW, Mercedes, JLR, Tata Motors & Volvo Auto.
References: International Organization of Motor Vehicle Manufacturers, Media Reports, Press Releases, Department for Promotion of Industry and Internal Trade (DPIIT), Automotive Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM), Union Budget 2026-27
