The Indian Automotive sector is on a drive to changing the automobile industry landscape. Being the fourth largest country in the Automobile sector, India is expected to be valued between $251.4 Billion and $282.2 Billion by the year 2026. With the growing dominance of the use of automobiles in the country, the interest of foreign companies in investing in the country for the sector is increasing in parallel.
According to data, the automobile production in India increased by 16.69% year-on-year to reach 10.88 Million vehicle units, during the months of April-July 2018. The Compound Annual Growth Rate (CAGR) in the country, between FY13-18, increased by 7.01% with 24.97 million vehicles being sold in FY18. BMW and Mercedes-Benz, the leading luxury car manufacturers recorded their best-ever half-yearly sales in India during January-June 2018.
The Indian government has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centers as well as the National Automotive Board to act as a facilitator between the government and the industry. Since the year 2015, five testing and research centers have been established in the country under NATRiP. The Government aims to develop India as a global manufacturing and Research & Development hub. These initiatives by the Government and the major Automobile players in the market are expected to make India a leader in the two-wheeler and four-wheeler market by the year 2020.
With the increasing global concern in the country, the Government has shifted its focus on electric cars in order to meet the Emission Reduction targets. To achieve the ambitious target of having only electric vehicles sold in the country, the Indian auto industry is expected to see 8-12% increase in its hiring during FY19. In the fillip to India’s mission of only Electric vehicles by 2030, the Ministry of Heavy Industries, under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme shortlisted 11 cities namely Delhi, Mumbai, Ahmedabad, Bengaluru, Jaipur, Lucknow, Hyderabad, Indore, Kolkata, Jammu and Guwahati for the introduction of these vehicles.
In order to cope up with the growing demand of the Indian automobile market, various international car manufacturing companies such as BMW, Audi, Toyota, Skoda, Volkswagen, and Mercedes Benz are willing to join hands with India entry consulting firms as their strategic partners in order to expand their horizon in the Automobile manufacturing sector. These companies have started providing finance to their customers in India through Non-Banking Financial Companies (NBFCs). India offers a comparative cost advantage of roughly 10-25 percent in comparison to that in Europe and Latin America; which acts as the major attraction force for foreign automobile companies to invest in the rapidly growing sector. The presence of large automotive clusters in the country: Delhi-Gurgaon-Faridabad in the north, Mumbai-Pune-Nashik-Aurangabad in the west, Chennai- Bengaluru-Hosur in the south and Jamshedpur-Kolkata in the east also prove the need of the hour.
Considering the growth rate in the Indian market, Global car manufacturers have been escalating their investments in the country, with the plan to leverage India’s competitive advantage in setting up export-oriented production hubs. With the help of Indian business consulting firms, a growth of 26.56% had been observed in the Indian automobile exports during April-July 2018. The growth is further expected to reach a CAGR of 3.05% during 2016-2026. The Indian Automobile industry received Foreign Direct Investments (FDI) worth $19.29 Billion between the months of April 2000 and June 2018.
The German Automobile Manufacturing company has declared its investment worth 1 Billion Euros in the Indian Automobile industry between the years 2019 and 2021. This has been done as a part of its latest strategy, led by the Skoda group in order to enhance its presence in the country and avail business opportunities in India. An Engineering Design and Development will be set up in Pune besides its enhancing capabilities at the group’s two plants at Aurangabad and Pune. One of the world’s largest automobile companies is pointing at a significant 5% share in the Indian passenger market through its sister brand, Skoda Auto. With the motive of giving the best customer support services at competitive prices, Volkswagen has entered the Indian Automobile industry planning to launch one new product every year, from the year 2021 to 2025.
