Indian automotive industry is seeing many low and middle-income families buying vehicles this year
The automotive industry is becoming the talk of the town in India. Why all of a sudden? Honestly, the need for vehicles in India has never been less. It has always been at the peak compared to other countries. But the difference now is that the Covid-19 pandemic has made people realize the need for vehicles. We can’t deny the fact that many people struggled during the pandemic to go from one place to another without government and private transport facilities. This has accelerated low and middle-income families to pick a vehicle that best suits their budget. Therefore, the Indian automotive industry is seeing a surge like never before.
Besides the fact that automotive industry is an essential source for many people, it is also a big contributor to the Indian economy. The Indian government is also a big supporter of the country’s automotive industry. They established better government policies, infrastructure, and other financial aids that could give a stronghold to the sector in the wake of expanding both manufacturing vehicle parts and assembling works. In 2017, India became the world’s fourth-largest automobile market. It is now set on the path to reach higher positions. But it is not easy. Today, other than coming up with cost-effective and user-friendly vehicles, automotive companies are chasing technology to address their needs. The consumer demand in the technological ground is also very high with people expecting everything at the edge. Henceforth, the future of the Indian automotive industry is anticipated to unravel high-end vehicles with features like automation and autonomous.
The Indian government’s recent motive to make all products inside the country itself, an initiative called ‘Atmanirbhar Bharat’ has greatly contributed to the automotive industry. Around 6.4% of the total GDP is from the automotive industry. It supports 8 million jobs directly and 30 million jobs indirectly in the value chain. The automotive industry accounts for cumulative
investments of US$35 billion over the last ten years and generates export revenue of US$27 billion that is nearly 8% of the total merchandise exports from India.
A statistical view
As per the record in 2019, the Indian automotive industry is the world’s fourth-largest India is the world’s fourth-largest manufacturer of cars and seventh-largest manufacturer of commercial vehicles. The Indian automotive industry is expected to reach US$250 billion by 2026. Remarkably, domestic automobiles in India account for most of the sales in the sector. It increased at a CAGR of 2.36 between 2016 and 2020 with 26.36 million vehicles being manufactured in the country in 2020 alone. In the domestic automobile market, two-wheelers and passenger vehicles are the most sold products.
Even though the concept of electric vehicles (EVs) is still in the first stage of blooming, the opportunity is estimated at US$7 billion in India by 2025. But reaching the goal is not easy. India is a country with a high population and it takes a lot of energy for the automotive sector to make people believe that electric vehicles are equally good as petrol and diesel vehicles.
A remarkable contribution by the Indian government to develop the country as global manufacturing and research and development (R&D) hub is the setting up of National Automotive Testing and R&D Infrastructure Project (NATRiP) centers as well as National Automotive Board to act as factors between government and the industry.
The contribution of technology
The invasion of technology in the Indian automotive industry paved the way for foreign firms to lay their foundation stones here. The first such foreign firm came into India in 1983. Maruthi Suzuki rolled out 192 cars which were based on Japanese models, with only tires and battery sources from MRF and Chloride India. Ever since then, foreign players have taken Indian as a successful market to roll out their new model cars. Indian manufacturers also come up with innovative and sophisticated cars that best serve their customers.