Why Automobile?
The automobile industry is among the key drivers of the Indian economy. The country marks the presence of major global auto manufacturers. It is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer globally. The market is anticipated to grow at a CAGR of 9% and reach $54.8 billion by 2027.
The Indian Government has launched the Automotive Mission Plan to increase the automobile industry's contribution to the GDP to 12%. In April-September FY25, the country produced 15.6 million units of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles.
Electric Vehicles (EVs) are a major constituent of the Indian automobile industry. Total sales for EVs in FY24 (April- January) were 1.3 million units. The market is estimated to reach $7.1 billion by 2025 and presents an opportunity worth $206 billion by 2030. The market will propel at a CAGR of 36% by 2026. The country deployed 10,000 EVs across 169 cities through the PM E-Bus Seva scheme.
The industry is witnessing significant investments targeting to be the largest EV market by 2030. Mercedes-Benz pledged $360 million in the Indian market. The government is contributing to the development. The Centre launched the PM E-DRIVE scheme allocating $1.3 billion, from October 1, 2024, to March 31, 2026. Ministry of Heavy Industries, Government of India, and Department of Expenditure launched the Electric Mobility Promotion Scheme 2024, with a total outlay of $60 million from 1st April 2024 to 31st July 2024.
The increasing domestic sales are significantly supporting the industry. Over 20 million vehicles were registered in 2023. The total sales in FY23 were 3.8 million units of passenger vehicles, 1.7 million units of passenger cars, and 2.0 million units of utility vehicles.
Growing Income
The per capita Net National Income (NNI) of India increased to $1,292.6 in 2023-2024, increasing the demand for automobiles within the country.
Vehicle Penetration
Domestic sales of vehicles are on the rise, and will result in 72 vehicles per 1000 people by 2025.
Expanding R&D hub
India owns 40% of the total $31 billion of global engineering and R&D expenditure.
Atmanirbhar Bharat Abhiyaan
The scheme promotes the Made in India initiative and allocates $269.8 billion to the manufacturing sector.
