TATA Indica EV

Future Of The Indian Automotive Industry

The Indian Automotive Industry has a very brief history, but over the years has grown into one of the largest markets even competing with the top players. Now with new reforms and regulations taking shape, what does the future hold for the Indian Automotive Industry?

India has seen a lot of ups and downs in terms of its automotive sector in the recent past. With vehicle sales constantly varying every year because of slow economic growth, high interest rates, inflation and expensive fuel rates. Even with all the above being said, India is still considered one of the largest markets for automobile manufacturing with a huge potential for growth ahead.

Talking about the present situation of the Indian automotive Industry, one of the leading Automotive Journalist in India Renuka Kirpalani explains that “The future Of Indian automotive Industry needs stability for growth. Policy has been too shaky for a long time, with tax structures constantly fluctuating, policy on diesel unclear, no real subsidies for hybrids. There needs to be a stable policy for the industry to grow as it was expected to.”

Many automobile manufacturers from around the world have shown a lot of interest in setting up their manufacturers plants in India due to various reasons like its geographical location, low wages and high skilled workforce making it the ideal condition for setting up production for both domestic and export sales.

Reports suggest that India currently stands in sixth position in terms of vehicle production having an average production number close to 24 million vehicles in 2016, while the Indian passenger and commercial vehicle market is ranked in fifth position.

The future of the Indian automotive industry looks a lot better with the Prime Minister of India Mr. Narendra Modi promoting the ‘Make in India’ movement, which promotes automobile companies from all over the world to set up production bases in the country which will help bring down the cost of most vehicles in the country making it more affordable to the middle class who form the large chunk of the India’s population, while also helping improve the amount of cash inflow from the automotive sector through higher export sales.

Companies like Toyota, Ford, Hyundai and Nissan have already set production facilities in the country and have been doing extremely well in the Indian market.  Now with the standard of living steadily increasing in the country, more people can afford luxury cars than before which is a good sign for automobile companies who are looking at the country as a future prospective manufacturing hub.

Stats from the Global information IHS Automotive forecasted in 2013, an increase in vehicle export from India from around 440,000 units to around 530,000 units in 2020. Another report suggests a market growth till about 5.4 million vehicular units by 2020 for India’s light vehicles.

The ‘Make in India’ Movement spear headed by the Indian Prime Minister has showcased their plans for the future of the automotive industry along with its aims and goals. As per their website, global car manufacturers have been steadily increasing their investments in the country catering to the ever-demanding domestic market, while also setting up production hubs mainly orientated for export market leveraging the competitive advantage of India. The best example for this can be seen in the aggressive move the German giants Mercedes-Benz have been making in the Indian market by introducing  more and more vehicles in every segment of the industry into India, right from the hatchback segment with their A-Class and B-Class range to their high-performance AMG vehicles.

Mercedes-Benz India line-up
Mercedes-Benz are now aggressively pushing vehicles into the Indian market looking at the potential growth of the auto industry in India

The movement also promises government support for R&D centres to be set up like the National Automotive Testing and R&D Infrastructure Project (NATRiP) as private car majors like Hyundai, GM and Suzuki are already looking at India as a prospective R&D base.

The Indian Automotive Industry will be finally taking steps moving towards electric and hybrid vehicles. The government will be soon introducing The National Electric Mobility Mission Plan 2020 (NEMMP 2020). With this plan being introduced, India will move towards being the largest two-wheeler and four-wheeler market by 2020 with an estimate of 6-7 million EV sales.

A pilot scheme has already been implemented since the 1st April 2015 for a period of two years under the name ‘Fast Adoption and Manufacturing of Hybrid & Electric vehicles’ which covers all the segments of the auto industry from two-wheelers to buses providing incentives to all of such vehicles.

The pilot project aims to showcase the benefits of adopting a much cleaner and eco-friendly mode of transport, while also exploring the operational viability of electric and hybrid vehicles. Indian automotive giant ‘Tata Motors’ have been working on an electric vehicle called the Tata Indica EV for some time now and are looking at its viabilities in the Indian market.

TATA Indica EV
The Indica EV from Tata Motors

The Indian automotive industry will also see many tax regulations and changes in the future. With the introduction of various plans as mentioned already, there will be a lot of potential for global car companies to set up R&D and manufacturing plants much easier with incentives provided by the Indian government. More over the incentives do not stop only at incentives from the central government alone, separate tax and local area tax incentives will further add to the total amount making incentives much higher.

With all the new plan introductions, tax changes and regulations taking place, the future of the Indian automotive industry does look bright. But having said that, all these changes are still in very early stages and will take a long time to actually come into place and even longer for the changes to become noticeable. Until now, though looks like the future of the Indian automotive industry seems to be headed in the right way with the future looking exciting.

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