Trade Analytics
Automobile
The automobile industry in India is expected to be the world's third largest by 2026.

Automobile Industry in India

Latest update: June, 2018

  • The automotive manufacturing industry comprises the production of commercial vehicles, passenger cars, three & two-wheelers.
  • Two-wheelers are by far the most popular form of vehicle in India, taking an 80 per cent share in 2015-16. India became the largest two-wheeler market in the world after selling 17.7 million two-wheelers in 2016.
  • 25.3 million automobiles produced in FY17.
  • Total production volume grew at a CAGR of 4.43 per cent during FY12-17.
  • Automobile exports from India increased 15.81 per cent year-on-year in April-February 2017-18. During the same period, two and three-wheelers exports increased 20.30 per cent and 37.02 per cent, respectively.

Note: FY18* - up to February 2018
Source: Society of Indian Automobile Manufacturers (SIAM)



Source: World Wealth Report (2011) of Merrill Lynch Wealth Management and Capgemini, Aranca Research, media sources

Last Updated: June, 2018

Introduction

The Indian auto industry became the 4th largest in the world with sales increasing 9.5 per cent year-on-year to 4.02 million units (excluding two wheelers) in 2017. It was the 7th largest manufacturer of commercial vehicles in 2017.

The Two Wheelers segment dominates the market in terms of voulme owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector.

India is also a prominent auto exporter and has strong export growth expectations for the near future. Overall automobile exports from India grew at 6.86 per cent CAGR between FY13-18. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the two wheeler and four wheeler market in the world by 2020.

Market Size

Overall domestic automobiles sales increased at 7.01 per cent CAGR between FY13-18 with 24.97 million vehicles getting sold in FY18.

The auto industry is set to witness major changes in the form of electric vehicles (EVs), shared mobility, Bharat Stage-VI emission and safety norms. Electric cars in India are expected to get new green number plates and may also get free parking for three years along with toll waivers@. Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-18. Premium motorbike sales in India crossed one million units in FY18.

Investments

In order 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 industry has attracted Foreign Direct Investment (FDI) worth US$ 18.413 billion during the period April 2000 to December 2017, according to data released by Department of Industrial Policy and Promotion (DIPP).

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

  • Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$ 155.20 million) to launch 20-25 new models across various commercial vehicle categories in 2018-19.
  • Mahindra & Mahindra (M & M) is planning to make an additional investment of Rs 500 crore (US$ 77.23 million) for expanding the capacity for electric vehicles in its plant in Chakan.

Government Initiatives

The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route.

Some of the recent initiatives taken by the Government of India are -

  • The Government of Karnataka is going to obtain electric vehicles under FAME Scheme and set up charging infrastructure across Bengaluru, according to Mr R V Deshpande, Minister for Large and Medium Industries of Karnataka.
  • 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 government will also set up incubation centre for startups working in electric vehicles space.
  • Energy Efficiency Services Limited (EESL), under Ministry for Power and New and Renewable Energy, Government of India, is planning to procure 10,000 e-vehicles via demand aggregation, and has already awarded contracts to Tata Motors Ltd for 250 e-cars and to Mahindra and Mahindra for 150 e-cars.
  • The government is planning to set up a committee to develop an institutional framework on large-scale adoption of electric vehicles in India as a viable clean energy mode, especially for shared mass transport, to help bring down pollution level in major cities.

Road Ahead

The automobile industry is supported by various factors such as availability of skilled labour at low cost, robust R&D centres and low cost steel production. The industry also provides great opportunities for investment and direct and indirect employment to skilled and unskilled labour.

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 are expected to grow 9 per cent in 2018.

Exchange Rate Used: INR 1 = US$ 0.015 as of March 1, 2018

References: Media Reports, Press Releases, Department of Industrial Policy and Promotion (DIPP), Automotive Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM), Union Budget 2015-16, Union Budget 2017-18

@ - as per the draft policy on e-vehicles prepared by NITI Aayog, Government of India

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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

India Now Magazine


The Luxe Edge - Reshaping India's Lifestyle Choices

English

+ More Publications >

IBEF Publication

IBEF Blog - INDIA ADDA – PERSPECTIVES ON INDIA More

author_Mr_Vinay_Kalantri_Founder_MD_The_Mobil_Wallet-21.jpg "India has always had a business community not averse to risk-taking"
Vinay Kalantri, Founder and Managing Director, The Mobile Wallet

Interview with Vinay Kalantri, Founder and Managing Director, The Mobile Wallet

Founder and Managing Director of The Mobile Wallet, Vinay Kal...

author_logo-ibef1.jpg Indian fintech start-ups: At the right place, at the right time!
IBEF, Knowledge Centre

Fintech, i.e. the technology that enables banking and financial services, is a very fast growing space in India, especially for the start-up domain. Fintechs are offering...

author_logo-ibef1.jpg India: The land of technology-led start-ups!
IBEF, Knowledge Centre

The Indian technology start-up domain is proudly placed at the fourth largest position in the world. The industry was sized at US$ 35 billion in FY18. Last decade saw eme...

author_logo-ibef1.jpg India: Weaving million success stories!
IBEF, Knowledge Centre

Textiles have been one of the oldest and largest industries in India historically, second only to agriculture, and it generates jobs for millions of people. The current e...

author_Varun-Aggarwal-headshot1.jpg Leading science and technology: The opportunity and the challenges for India
Varun Aggarwal, co-founder and Head of Research, Aspiring Minds | Author of 'India Next'

Today is the most opportune time for India to revolutionise its science and technology ecosystem. The size of our economy provides the capital, manpower and market to inv...

author_Erich-Nesselhauf-MD-CEO-DICV1.JPG "We always firmly believed in the Make in India initiative. We're probably one of the most successful poster examples..."
Erich Nesselhauf, MD & CEO - Daimler India Commercial Vehicles

Daimler India Commercial Vehicle has been able to create a space for its offerings in the already crowded domestic commercial vehicle market. Erich Nesselhauf, MD & C...

ideas More

Ideas

Zuper: Dynamic Disruptor
Zuper is a B2B Software as a Service (SaaS) offering for organizations, irrespective of shape and size. It is the first in Asia to offer voice biometrics-based timesheet management of workforce. Zuper offers an end to end platform to bring together the power of people, process, product and promise. ...

JOIN IBEF.org

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

Error

Already a member?
Login / Retrieve Password