The automotive industry accounts for 7.5% of India’s total GDP. Further, with the new Automotive Mission Plan 2026, the government expects to triple the industry’s revenue. With this move, the sector will account for an impressive 12% of the GDP. India is the world’s 4th largest producer of cars. Not only this but also is now battling with China to become the largest two-wheeler market. India is expected to become the third-largest automotive market in the world by 2020.
The demand for private vehicles doesn’t seem to slow down. This is despite a growing working population, expanding middle class, and increasing disposable income. Therefore, more people can afford a car. Besides, for whom a car is still a desire, public transport systems are emerging and improving in major cities.
Further, India is a manufacturing destination for most global automobile companies. Therefore, this attracts many Foreign Direct Investments to India, as well as supports local supplying companies. Nevertheless, the auto-component parts sector has shown the strongest growth of 18.3% in the automotive industry. For the purpose of this the Automotive Component Manufacturers Association of India (ACMA) strongly recommends national and international companies invest in R&D. This will make India strong on the current electric vehicle trend. Therefore, the Indian automotive sector is considered the world leader in electric vehicles. In fact, about 87% of car owners are ready to shift to electric vehicles. The trend toward electric vehicles requires lots of innovations and investments.
Above all, the sector already attracted 19.3 billion USD between 2000 to 2018. In addition, it also enjoys the prospect of 2 major investments from Hyundai and Saic motors.
Moreover, numerous companies already operating in India have opened new plants in India to match the upcoming demand. As a result, the current trends have a lot of potential for foreign companies. Not only they can contribute to the automotive sector with their knowledge but also with their innovation, and supportive activities. Additionally, companies can find a large pool of inexpensive, skilled workforce for this industry in India. Subsequently, this further opens opportunities for companies wanting to enter the Indian market.