Automotive industry in India

India is one of the four largest car producers in the world and offers car makers an attractive market. In India, the demand for passenger cars does not seem to be slowing down. On the contrary, the rapidly growing labour force and middle class, who have an increasingly higher disposable income, mean that more and more Indians can afford a car. India is expected to be the third largest car market in the world by 2030.

The automotive industry therefore accounts for 7.1% of India's total GDP. The Indian Government wants to increase this share to 12% of GDP between 2016 and 2026, thus creating 65 million jobs and tripling the turnover of the Indian car industry.

India is therefore an interesting production destination for international car companies. It is considered the world leader in electric vehicles. In India, around 87% of car owners are willing to switch to electric vehicles. As a result, the industry already attracted USD 19.3 billion in investments between 2000 and 2018 and expects to attract another USD 8-10 billion in foreign investments by 2023, including from Tesla.

The growth of the sector offers opportunities to foreign companies, as their knowledge of innovation and other support activities is highly sought after in this industry. In addition, international companies in India can draw on a large pool of cheap, skilled labour, which provides interesting opportunities for companies looking to enter the Indian market.

Market statistics on automobile industry in India

• The Indian passenger car market was valued at $33 billion in 2021 and is expected to reach $55 billion by 2027. The electric vehicle (EV) market in India is estimated to be worth $8 billion by 2025.

• The Indian auto market was valued at $100 billion in 2021 and is expected to be worth $160 billion by 2027, an average growth rate of 8.1% from 2022 to 2027.

COVID-19 Impact

The Indian auto sector was initially hit hard by the corona crisis, with a decline of over 18% in the fiscal year 20-21. But once the lockdowns ended at the end of 2020, and with it the travel restrictions within the country, the auto sector saw a resurgence in demand in high-volume segments such as two-wheelers and passenger cars.

Although the sector is still facing challenges from the pandemic, the Indian auto industry seems to have left most of them behind. The sector is benefiting from new incentives such as global supply chain recovery, government incentives to increase exports and demand for technological innovation such as electric vehicles. These developments are creating opportunities within the automotive industry at all levels.

The major players in the automobile industry in India

Interesting investment opportunities

• Passenger vehicles: passenger cars, commercial vehicles, multipurpose vehicles.

• Bicycles: mopeds, scooters, and motorbikes.

• Tricycles: passenger and freight transport.

• Commercial vehicles: light commercial vehicles, medium and heavy commercial vehicles.

• High demand for low-cost electric vehicles that are suitable for safe short-distance commuting (50-100 km/ride on average) and robust enough to drive reliably through Indian summers and monsoons.

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