Automobile Industry in India

By 2030, the Indian government has committed that 30% of the new vehicle sales in India would be electric.

Advantage India

Growing
Demand

*Rising middle-class income and young population will result in strong demand growth.

*The Indian automotive industry is targeting to increase the export of vehicles by five times between 2016-26.

*Automobile exports from India rose 19% to over 5.3 million units in FY25, led by strong demand for passenger vehicles, two-wheelers, and commercial vehicles abroad.

*The total production of Passenger Vehicles*, Three Wheelers, Two Wheelers, and Quadricycle in January 2026 was ~2.9 million units.

Opportunities

*Focus shifting on electric cars to reduce emissions.

*Government aims to transform India into an R&D hub.

*India could be a leader in shared mobility by 2030, providing opportunities for electric and autonomous vehicles.

*The electric vehicles industry is likely to touch Rs. 20,00,000 crore (US$ 234 billion) and will create around five crore jobs by 2030.

Rising
Investment

*India offers 10-25% operational cost savings for auto firms compared to Europe and Latin America.

*The automobile sector attracted Rs. 2,64,456 crore (US$ 39.7 billion) in equity FDI Inflow between April 2000 - December 2025.

*India is set to become the largest EV market by 2030, with an investment potential exceeding US$ 200 billion over the next five years.

*The PLI scheme for automobiles and auto components received Rs. 2,818.9 crore (US$ 325.6 million) in FY26.

Policy
Support

*Automotive Mission Plan 2016-26 is a mutual initiative by the Government of India and the Indian automotive industry to lay down the roadmap for the development of the industry.

*In December 2025, the Government of India disbursed Rs. 1,350 crore (US$ 152 million) under the PLI scheme to boost domestic automotive and EV manufacturing.

*In February 2026, the Government of India doubled the allocation for the auto PLI scheme to Rs. 5,940 crore (US$ 672 million) in the Union Budget.

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Last updated: Feb, 2026

Automobile Industry Report

Feb, 2026

Introduction

The Indian automobile industry has long been a reliable barometer of economic performance, given its critical role in both macroeconomic expansion and technological advancement. Within the sector, the two-wheeler segment dominates in terms of volume, driven by a growing middle class, a predominantly young population, and rising demand from rural markets. Demand for commercial vehicles has also strengthened, supported by the expansion of logistics and passenger transportation services. Market growth is expected to be shaped by emerging trends such as vehicle electrification, particularly in three-wheelers and small passenger cars.

India has also established itself as a prominent auto exporter with strong growth prospects in the near future. Automobile exports rose 19% in FY25 to over 5.3 million units, led by robust demand for passenger vehicles, two-wheelers, and commercial vehicles in global markets. Complementing this momentum, government initiatives such as the Automotive Mission Plan 2026, the scrappage policy, and the production-linked incentive (PLI) scheme are expected to position India as a global leader in both the two-wheeler and four-wheeler markets.

Market Size

India enjoys a strong position in the global heavy vehicles market as the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. The total production of Passenger Vehicles*, Three Wheelers, Two Wheelers, and Quadricycle in January 2026 was ~2.9 million units. Two-wheelers and passenger vehicles dominate the domestic Indian auto market. Two-wheelers and passenger cars accounted for 77.26% and 16.13% of market shares, respectively, In FY26 (April-December 2025) Passenger car sales are dominated by small and midsized cars.

The electric vehicle (EV) market in India is emerging as a significant growth driver. India achieved a milestone with the sale of 1,00,000 EVs in CY24, up from 82,688 units in CY23. A study by CEEW Centre for Energy Finance identified a US$ 206 billion opportunity in the Indian EV sector by 2030, requiring an estimated US$ 180 billion investment in vehicle manufacturing and charging infrastructure. Supporting this outlook, NITI Aayog and the Rocky Mountain Institute (RMI) project India’s EV finance industry to reach US$ 50 billion (Rs. 3.7 lakh crore) by 2030. Meanwhile, Union Road Transport and Highways Minister projects the electric vehicle (EV) market to grow to a total value of Rs.20 lakh crore (US$ 22.63 billion) by 2030, creating five crore new jobs.

Number of Automobiles Manufactured in India

Investments

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 electric vehicles industry in India is likely to touch Rs. 20,00,000 crore (US$ 234 billion) and will create around five crore jobs by 2030.

Some of the recent/planned investments and developments in the automobile sector in India are as follows:

On February 23, 2026, Škoda Auto Volkswagen India commenced production of the new Kushaq SUV at its Chakan plant in Pune, marking a key milestone in its India operations with deliveries scheduled to begin in March 2026.
On February 16, 2026, JSW MG Motor India announced plans to invest US$330–440 million (Rs. 3,000–4,000 crore) aimed to increase plant capacity to around 300,000 units annually and accelerate its push into electric and hybrid vehicles.
On February 9, 2026, Tata Motors-Jaguar Land Rover inaugurated a Rs. 9,000 crore (US$ 1.01 billion) luxury car manufacturing plant in Ranipet, Tamil Nadu, marking a major expansion in India’s premium auto manufacturing. The facility began operations with the rollout of the Range Rover Evoque and was planned to scale capacity to 2.5–3 lakh vehicles annually in phases.
On February 6, 2026, Mahindra & Mahindra Ltd. announced a Rs. 15,000 crore (US$ 1.69 billion) investment to set up an auto and tractor manufacturing plant in Nagpur, Maharashtra. The facility was planned to support both ICE and electric vehicles, strengthening its production capacity. The move was expected to boost regional industrial growth and employment.
On January 9, 2026, Ashok Leyland inaugurated an electric vehicle manufacturing plant in Lucknow, Uttar Pradesh, marking a major step in its clean mobility push. The facility was designed with an annual capacity of up to 5,000 vehicles and focused on electric buses and commercial vehicles.
On December 4, 2025, VinFast announced a US$500 million (Rs. 4,418 crore) investment in India to expand its manufacturing operations in Tamil Nadu. The investment is aimed at developing new production lines for electric buses, scooters, and related infrastructure, alongside its existing EV plant.
On November 20, 2025, Maruti Suzuki India Limited inaugurated its 1,500th parts and accessories distributor touchpoint in Mumbai, expanding the network to cover approximately 760 cities and enhancing parts availability for millions of vehicles.
On October 15, 2025, Hyundai Motor India Ltd. (HMIL) announced an investment plan of Rs. 45,000 crore (US$ 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.
Maruti Suzuki’s Kharkhoda plant (Haryana) began commercial production in February 2025, adding 2,50,000 units of capacity to lift India output to 2.6 million, supporting record exports and aligning with plans for a fourth Gujarat plant to reach 4 million units annually by FY31.
The India-United Kingdom (UK) free trade agreement signed in July 2025, boosts the Indian auto sector’s domestic competitiveness by reducing import tariffs on fully built passenger vehicles from 100% to 10% over 10 years, alongside calibrated annual quotas starting at 10,000 units, encouraging localisation, innovation, and technology upgrades.
Goods and Service Tax (GST) on EVs has reduced from 12% to 5%.
The automobile sector received a cumulative equity FDI inflow of about Rs. 2,48,683 crore (US$ 29.10 billion) between April 2000-March 2025.
The electric three-wheeler segment achieved record sales of 7,41,420 units in FY25. In this segment Mahindra and Mahindra Last Mile Mobility sold 78,524 units, the highest in the segment with a market share of 42.9%.
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.
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.
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 May 28, 2025, Nissan announced an Rs. 6,496 crore (US$ 760 million) investment in India over the next two years to launch multiple new models and expand operations, reinforcing its strong commitment to the Indian market
On April 17, 2025, Tata Motors announced that it had filed a record 250 patents and 148 design applications in FY25, its highest ever in a single year.
In March 2025, company has announced a significant investment of Rs. 7,410 crore (US$ 864 million) to establish a third manufacturing facility in Haryana. This strategic expansion is projected to elevate the region's production capacity to 7,50,000 units annually by 2029.
On March 29, 2025, BYD announced plans to set up its first EV manufacturing plant near Hyderabad, Telangana, targeting an annual capacity of 6,00,000 vehicles by 2032.
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.
Mahindra & Mahindra plans capital expenditure of Rs. 20,000-25,000 crore (US$ 2.3-2.9 billion) over FY26 and FY27 to expand its automotive and farm equipment businesses.
JSW MG Motor India plans to raise Rs. 2,564-2,991 crore (US$ 300-350 million) to expand its electric vehicle lineup and increase production capacity, targeting EVs to make up 65% of sales by end-2025.
Skoda Volkswagen India plans a Rs. 9,923 crore (US$ 1.16 billion) investment under its India 3.0 strategy to boost premium SUVs and electric vehicles using the CMP 21 platform.
On May 15, 2024, Kinetic Green announced plans to enter battery manufacturing as part of its Rs. 10,000 crore (US$ 1.17 billion) company by 2029 strategy, with a Rs. 500 crore (US$ 58.5 million) capex investment over 3-4 years to produce batteries for its e-Luna and L5 3-wheeler models.
Mahindra & Mahindra Ltd plans to invest Rs. 26,000 crore (US$ 3 billion) in its automotive business over 2027, with Rs. 12,000 crore (US$ 1.42 billion) allocated specifically for its electric vehicle unit.
Between March and May 2025, Hero MotoCorp invested Rs. 525 crore (US$ 62.1 million) in Euler Motors for a 32.5% stake, leading its Rs. 638 crore (US$ 76.6 million) Series D round and marking its entry into the electric three-wheeler market.
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.
Honda Motor Japan has announced plans to establish a dedicated electric motorcycle production facility in India by 2028. The new plant will be operational by 2028 and is expected to produce a wide variety of electric two-wheelers by combining modules common to multiple models, aiming to reduce costs and increase efficiency.
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.
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.
The Renault-Nissan alliance is stepping up its investments in India plans to invest US$ 600-700 million at its Chennai-based facility to step up platform localisation and improve sophistication levels in manufacturing.
In March 2024, Tata Motors Group has signed a facilitation Memorandum of Understanding (MoU) with the Government of Tamil Nadu to explore setting-up of a vehicle manufacturing facility in the state. The MoU envisages an investment of US$ 1,081.6 million (Rs. 9,000 crores) over 5-years.
In April 2024, Maruti Suzuki India Limited, commissioned another vehicle assembly line at its Manesar facility.
In February 2024, Hyundai Motors has announced it will invest over US$ 3.85 billion from 2023 to 2033 in expanding its EV range and enhancing its current car and SUV platforms.
In January 2024, Mercedes-Benz announced an investment of Rs. 200 crore (US$ 24.04 million) in India and is gearing up to introduce more than a dozen new cars, including EVs, during the year.
In February 2024, Klaus Zellmer CEO of Skoda Auto said India is the most promising growth market for Skoda Auto and Skoda Auto India is looking to increase its share in the Indian market to 5% by 2030.
In April 2024, Hero Motocorp said it has opened an assembly facility in Nepal in partnership with its distributor CG Motors with capacity of 75,000 units per annum.
Ola Electric IPO to be the first auto company in India to launch an IPO in over two decades (20 years). It has an expected size of US$ 1.01 billion (Rs. 8,500 crore).
In January 2024, BMW sold 1,340 luxury cars, the highest in the segment, which gave it a market share of 0.34%. Mercedes-Benz sold 1,333 cars in January 2024.
In January 2024, Hyundai Motor India Limited announced US$ 743.8 million (Rs. 6,180 crore) investment plans in the state of Tamil Nadu including US$ 21.7 million (Rs. 180 crore) towards a dedicated ‘Hydrogen Valley Innovation Hub,’ in association with IIT- Madras.
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, Mahindra & Mahindra Ltd. and the India-Japan Fund ("IJF"), managed by the National Investment and Infrastructure Fund Limited ("NIIF"), entered into a binding agreement, with IJF committing to invest US$ 48.1 million (Rs. 400 crore) in Mahindra Last Mile Mobility Limited (MLMML).
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 November 2023, Tata Motors inaugurated its state-of-the-art Registered Vehicle Scrapping Facility in Chandigarh.
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, Mahindra & Mahindra was 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 announced to invest US$ 2 billion towards developing new products and platforms over the next four years.
In June 2023, Hero MotoCorp revealed plans 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 sanctioned 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 revealed 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.
In February 2023, German luxury car maker Audi India began local production of the Audi Q3 and Audi Q3 Sportback at the Skoda Auto Volkswagen India Private Limited (SAVWIPL) plant in Aurangabad.
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.

Government Initiatives

The Government of India encourages foreign investment in the automobile sector and has allowed 100% FDI under the automatic route. Some of the recent initiatives taken by the Government of India are:

On February 1, 2026, the Government of India doubled the allocation for the auto PLI scheme to Rs. 5,940 crore (US$ 672 million) in the Union Budget 2026-27 despite low utilisation in the previous year. The move signaled expectations of higher production and investment as the scheme enters its growth phase.
On December 10, 2025, the Government of India disbursed Rs. 1,350 crore (US$ 152 million) under the PLI scheme to boost domestic automotive and EV manufacturing. The initiative supported approved OEMs and component makers while promoting localisation and advanced technology production
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 EDRIVE and PLI schemes to boost domestic manufacturing and green mobility.
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 e2Ws, e3Ws, ebuses, heavy EVs, public charging infrastructure, vehicle testing, and localisation, with its tenure extended to March 31, 2028.
Under the upcoming CAFÉ 3 norms, effective from April 2027, India will place electric vehicles and flex-fuel vehicles which use ethanol-petrol blends on equal regulatory footing.
As of July 31, 2025, India has advanced EV adoption through FAME-II, PM E-DRIVE, and PM-eBus Sewa, committing over Rs. 42,000 crore (US$ 4.91 billion) towards incentives, infrastructure, and localisation across vehicle segments and regions.
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.
Under Electric Mobility Promotion Scheme 2024 government aims to support 3,72,215 EVs including e-2W (3,33,387) and e-3W (38,828 including 13,590 rickshaws & e-carts and 25,238 e-3W in L5 category).
Ministry of Heavy Industries, Government of India with the approval of Department of Expenditure has launched Electric Mobility Promotion Scheme 2024 to further accelerate the adoption of EVs in the country which is a fund limited scheme with a total outlay of Rs. 500 crore for the period of 4 months, from 1st April 2024 to 31st July 2024.
In January 2024, the Ministry of Heavy Industries extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year. The incentive will now be applicable for a total of five consecutive financial years, until March 31, 2028.
Ministry of Heavy Industries (MHI) officials revealed that India plans to launch a new scheme to incentivise electric vehicle purchases and improve charging infrastructure, aligning with the interim budget's focus on eco-friendly transportation. Also, the allocation of US$ 321.5 million (Rs. 2,671.33 crore) for 2024-25 is expected to be utilized by March 31, 2024.
Under phase-II of FAME India Scheme, subsidy amounting to US$ 696.8 million (Rs. 5790 crores) has been awarded to EV manufacturers on sale of 13,41,459 number of electric vehicles till January 31, 2024.
The FAME Scheme was extended for a further period of 2 years up to 31st March, 2024
In January 2023, under the FAME-II scheme, the Centre approves US$ 97.77 million (Rs. 800 crore) for 7,432 public fast charging stations.

Road Ahead

The automobile industry in India benefits from factors such as the availability of skilled labour at low cost, robust R&D centres, and affordable steel production. It also provides significant investment opportunities and generates both direct and indirect employment for skilled and unskilled workers. The electric vehicle (EV) sector alone is projected to create five crore jobs by 2030, underscoring its potential as a major driver of employment and growth.

To support this expansion, the Ministry of Heavy Industries (MHI) has extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year. The scheme now offers incentives on determined sales over five consecutive financial years from 2023-24 to 2027-28, with disbursements in the subsequent year. It has already proven highly successful, attracting proposed investments of US$ 8.1 billion (Rs. 67,690 crore) against the original target of US$ 5.1 billion (Rs. 42,500 crore), with US$ 1.6 billion (Rs. 13,037 crore) invested by December 31, 2023.

Looking ahead, the government is working to overhaul the country’s transportation system by creating an integrated EV mobility ecosystem with a low carbon footprint and high passenger density, especially in urban areas. Its long-term strategy and policies are designed to accelerate EV adoption in line with growing customer demand for cleaner and more efficient transportation solutions. With these initiatives, India is also well positioned to become a global leader in shared mobility by 2030, opening new avenues for electric and autonomous vehicles.

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, Federation of Automobile Dealers Association (FADA), Press Information Bureau (PIB)

Automobile Industry Report

Feb, 2026

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