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Automotive industry in India

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Automotive industry in India
NameAutomotive industry in India
CaptionA Maruti Suzuki assembly plant in Manesar.
Founded1897 (first car)
ProductsAutomobiles, Commercial vehicles, Auto components
Production4.25 million vehicles (FY 2023)
Num employeesOver 19 million (direct and indirect)

Automotive industry in India. It is one of the largest in the world and a critical pillar of the nation's manufacturing output. The sector has evolved from a protected market with few players to a globally competitive hub for small cars, Two-wheelers, and Auto components. Major global OEMs have established significant operations in the country, which is also home to domestic giants like Tata Motors and Mahindra & Mahindra.

History

The industry's origins trace back to 1897 when the first car arrived in Mumbai. Early assembly operations were initiated by companies like General Motors and Ford in the 1920s. The real foundation was laid with the establishment of Hindustan Motors in 1942 and the launch of the iconic Ambassador. A period of strict License Raj protection followed until the 1980s, when the entry of Maruti Suzuki through a joint venture with the Government of India revolutionized the market with affordable, modern cars. The economic liberalization of 1991 opened the sector to foreign investment, attracting major players like Hyundai, Honda, and Toyota.

Market structure and key players

The market is segmented into passenger vehicles, Commercial vehicles, Three-wheelers, and Two-wheelers, with the two-wheeler segment dominating by volume. The passenger vehicle segment is led by Maruti Suzuki, followed by Hyundai and Tata Motors. In utility vehicles, Mahindra & Mahindra is a dominant force. The Commercial vehicle space is contested by Tata Motors, Ashok Leyland, and Eicher Motors. Key global OEMs present include Volkswagen, Škoda Auto, BMW, and Mercedes-Benz. The robust Auto component industry is represented by companies like Bosch Limited and Motherson Sumi Systems.

Manufacturing and production

India is a major global manufacturing base, producing over 4.25 million vehicles annually. Key manufacturing clusters are located in the National Capital Region around Gurugram and Manesar, Chennai (often called the "Detroit of India"), Pune, and Ahmedabad. The sector is supported by a vast network of ACMA-member component suppliers. The government's Make in India initiative and the Production Linked Incentive scheme for advanced chemistry cells and auto components aim to boost local manufacturing, including for Electric vehicles.

Government policies and regulations

Policy has been instrumental in shaping the industry. The Automotive Mission Plan (AMP) 2016-26 sets a roadmap for growth. Stringent emission norms, with the leapfrog to BS-VI standards in 2020, have been a major regulatory shift. The FAME India scheme provides subsidies to promote Electric vehicle adoption. Other key regulations include the Motor Vehicles Act, 1988, and safety norms aligned with global Global NCAP standards. Policies are formulated by the Ministry of Heavy Industries and the Society of Indian Automobile Manufacturers.

Impact on economy and employment

The automotive sector contributes approximately 7.1% to India's GDP and accounts for 49% of the nation's manufacturing GDP. It is a major employment generator, supporting over 19 million jobs directly and indirectly. The industry is a significant contributor to GST revenue and excise duty collection. It also drives growth in ancillary sectors like steel, glass, and IT services, and fosters technological development through ARAI and NATRiP facilities.

The future is being shaped by a rapid shift towards electric mobility, with companies like Tata Motors and new entrants like MG Motor launching EVs. Advances in connectivity, autonomous driving technologies, and Shared mobility are key trends. Major challenges include the high cost of EV batteries, underdeveloped charging infrastructure, and global supply chain disruptions affecting semiconductors. The industry also faces the ongoing task of meeting stringent CAFE norms and competition from international players in a post-pandemic market.

Category:Automotive industry in India Category:Manufacturing in India Category:Economy of India