• India has 4 large auto manufacturing hubs: Delhi-Gurgaon-Faridabad in the North, Mumbai-Pune-Nashik-Aurangabad in the West, Chennai- Bengaluru-Hosur in the South and Jamshedpur-Kolkata in the East.
• Out of 30.9 Mn vehicles manufactured in FY 2018-19, India has exported 4.6 Mn.
• The FDI equity inflow received by the Automobile Industry in FY 2019-20 is valued at USD 2.82 Bn.
• Out of 30.9 Mn vehicles manufactured in FY 2018-19, India has exported 4.6 Mn.
• The FDI equity inflow received by the Automobile Industry in FY 2019-20 is valued at USD 2.82 Bn.
• The Department of Heavy Industry has helped set up India’s first Machine Tool Park Park (TMPT) is a world class facility that has been developed on 530 acres of land.

Introduction

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per cent of the country’s Gross Domestic Product (GDP). The Two Wheelers segment with 80 per cent market share is the leader of the Indian Automobile market 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. The overall Passenger Vehicle (PV) segment has a 14 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for the near future. Overall automobile exports grew 13.01 per cent year-on-year between April-December 2017. 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 2W and Four Wheeler (4W) market in the world by 2020.

Market Size

• Domestic automobiles production increased at 2.36 per cent CAGR between FY16-20 with 26.36 million vehicles being manufactured in the country in FY20. Overall, domestic automobiles sales increased at 1.29 per cent 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 per cent and 12.9 per cent 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 per cent during FY16-FY20. Two-wheelers made up 73.9 per cent of the vehicles exported, followed by passenger vehicles at 14.2 per cent, three-wheelers at 10.5 per cent and commercial vehicles at 1.3 per cent.
• EV sales, excluding E-rickshaws, in India witnessed a growth of 20 per cent and reached 1.56 lakh units in FY20 driven by two-wheelers.
• Premium motorbike sales in India recorded a seven-fold jump in domestic sales, reaching 13,982 units during April-September 2019. The sale of luxury cars stood between 15,000 to 17,000 in the first six months of 2019.
• Production of passenger vehicles, commercial vehicles, three-wheelers and two-wheelers grew at 11.27 per cent year-on-year between April-December 2017 to 21,415,719 vehicles. The sales of passenger vehicles and two-wheelers grew by 5.22 per cent and 40.31 per cent year-on-year respectively, in December 2017.

What is the investment scope in the automobile industry in India?

• Passenger vehicles: passenger cars, utility vehicles, multi-purpose vehicles.
• Two-wheelers: mopeds, scooters, and motorcycles.
• Three-wheelers: passenger carriers, goods carriers.
• Commercial vehicles: light commercial vehicles, medium and heavy commercial vehicles.
• Huge demands for low-cost electric vehicles that are suited for safe short-distance urban commutes (averaging 50-100 km/trip) that are rugged enough to perform reliably through India’s summers and monsoon. 

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: