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Studies available with the government say that all this has been possible in the last decade because of policy reforms, fiscal incentives, and infrastructure development
As per a study available with the finance ministry, the production of vehicles has increased from 2 million in 1991-92 to around 28 million in 2023-24. Representational image
For a country once obsessed with foreign-made cars to one where we now proudly buy our own, India’s automobile sector has come a long way. The Make in India programme, launched in 2014, has boosted India’s car production and, more importantly, given a leg-up to the electric vehicle (EV) manufacturing sector, government sources say.
Studies available with the government say that all this has been possible in the last decade because of policy reforms, fiscal incentives, and infrastructure development. Today, India has become a key player in the global automobile sector. In fact, we have also invited and attracted substantial investments. It has also led to innovations and experiments and increased localised or indigenous economic growth and sustainability.
For those who step back in time, remember that India’s automobile industry actually opened up in 1991 when it allowed for FDI and foreign investments into the automobile sector. Today, we have most of the biggest brands in the world actually setting up their own manufacturing units in the country. The reason behind this is that these big automobile giants now feel that India is conducive to manufacturing these automobiles. Here, we have the manpower, expertise, and capability to provide the components.
As per a study available with the finance ministry, the production of vehicles has increased from 2 million in 1991-92 to around 28 million in 2023-24.
In fact, the turnover is believed to be around US$240 billion, and India’s export of vehicles and auto components is around US$35 billion. The best part is that this generates employment for around 30 million.
Today, India is the largest manufacturer of three-wheelers. It’s among the top two manufacturers of two-wheelers in the world, the top four manufacturers of passenger vehicles, and the top five manufacturers of commercial vehicles.
But making cars is not enough. The real challenge is the components and parts. How many countries can do it indigenously? This is where India has made huge strides, according to information provided by government sources. This has been the key to India’s manufacturing sector, with critical parts and systems in domestic vehicle manufacturing. In fact, a broad spectrum of products, including engine parts, transmission systems, brake systems, electrical and electronics components, body and chassis parts, and much more, are now being made in India itself.
This is also possible because of the increasingly skilled workforce and strong policy support from the government. In fact, according to the finance ministry estimate, the auto component sector is expected to reach a US$100 billion export target by 2030, making it one of the biggest employment opportunities in the country.
It is important to highlight automotive and automobile growth because it contributes around 2.3% of growth to the GDP. More than that, it also shows an increase in supply because there has been an increase in demand. An increase in demand for cars also shows that people’s salaries are rising. People are ready to spend more, and their purchasing power has grown. The government is also making the larger point that, especially with a sop given to the middle class in the last union budget, more and more middle-class people would now want to step out and make the transition from two-wheelers to four-wheelers or even upgrade the kind of car they own.
But India’s real good story, if you’re talking about automobile manufacturing, is actually in the electric vehicle (EV) sector. Today, we stand at 4.4 million electric vehicles (EVs) registered till August 2024, which also includes 9.5 lakh in the first eight months of 2024. It is believed that government programmes like the PLI for advanced chemistry cells have also been an important factor. In fact, in the last union budget, the government allocated over Rs 2,671 crore under the scheme and proposed exempting custom duties from importing critical minerals required for EV cells. If you go by the figures given by the Indian Automobile Manufacturers Society, there has been a substantial increase in the manufacturing of EVs over the last couple of years. For example, in 2023, it was 9,217 for passenger vehicles. In the case of commercial vehicles, it has gone up to 8,660.
Sources say that the government plans to come up with more cuts and benefits for the EV sector, as the PM is keen to make the transition to a clean, green India and fulfil the aspirations of the people.
