Automotive pulse - India

The newsletter offers a comprehensive overview of India’s automotive sector landscape, encapsulating its economic performance, fiscal dynamics and a holistic assessment of its economic vitality from January 2024 to November 2024. It includes sectoral analyses, governmental initiatives and projections for the future.

The automotive sector in India is undergoing a significant transformation, driven by technological innovation, changing consumer preferences and an increasing demand for sustainable and electric vehicles (EVs). The government's updated policies on EVs, including lowered import duties on premium electric cars and incentives for foreign investors who contribute significantly to local production, are particularly significant. These measures are part of a larger strategy to support the 'Make in India' initiative, which includes plans to locally produce 28 components and the implementation of the 'Automotive Mission Plan 2047'. The growth of the automotive sector is also greatly influenced by contributions from various regional parts of India, including North, South, East and West India in terms of increased development of automotive manufacturing hubs, centres and policy initiatives to further bolster the sector’s growth. These initiatives aim to enhance India's manufacturing skills and establish the country as a key player in the global automotive sector.

India's aspiration to emerge as the world's biggest car manufacturer by 2029 is gathering momentum with numerous mergers and acquisitions (M&A) and private equity (PE) deals. As of 2023, India stands as the third-largest automotive manufacturer, trailing only behind China and the U.S. With the production of 25.9 million units in 2023, India is steadily closing the gap with China, which produced around 30 million units in the same year. Significant international investments and geopolitical changes are presenting India with the opportunity to be a more cost-effective substitute for China, predicting India's automotive sector to be worth USD1 trillion by 2035.

To achieve this milestone, enhancing the domestic manufacturing landscape through targeted investments and collaborations will be crucial, along with providing attractive policies and incentives to foreign firms for establishing production hubs in India.

It is further crucial to enhance and update the infrastructure for EVs. This involves not only physical elements such as charging stations, but also the legal structure to facilitate innovation and the adoption of new technologies. Partnerships between governmental agencies and private entities will play a critical role in this process. Moreover, by enhancing the 'Make in India' campaign through the increased localisation of automotive parts, the sector can fortify domestic supply chain and lessen the reliance on imports.

India's automotive sector stands to gain greatly from progress in its supporting sectors such as oil and gas, semiconductor, tyre and green hydrogen. By cultivating relationships between these sectors and the automotive sector, India can boost its global competitiveness. Ongoing investment in research and development, especially in upcoming technologies such as hydrogen fuel cells and ADAS will help keep India at the cutting edge of automotive innovation. These advancements are expected to position India as a key figure in the global automotive landscape, providing plentiful investment prospects and paving the way for a thriving future for the sector.