30 Sep 2022
Today, the Indian automobile industry is one of the most important drivers of economic growth in the country and one of its biggest employment generators, contributing 8% of the country’s total export and accounting for 6% of GDP and around 35% of the manufacturing GDP. In addition, it currently provides employment to more than 19 million people directly and indirectly. Therefore, the Indian automobile industry is expected to be the world’s third-largest market by 2026 in terms of volume.
This is a giant leap from where the sector was 75 years ago, when Hindustan Motors and Premier Automobiles Limited were the only two companies in India to manufacture indigenous passenger cars, along with a few other players like Telco (now Tata Motors), Ashok Leyland and Mahindra & Mahindra (M&M), who also made forays into commercial vehicle manufacturing.
The entry of Suzuki (then Maruti Udyog Limited) in the 1980s heralded modernization in the Indian auto industry, which was further accelerated with the opening of India’s economy in the 1990s. Several foreign brands such as Ford, General Motors, Toyota and Hyundai entered the market to manufacture and sell cars here. Our own Indian brand, Indica, was also launched by Tata Motors in 1998.
The country was already home to established two- and three-wheeler manufacturers like Bajaj, TVS and commercial vehicle manufacturers like Telco and Ashok Leyland. This proliferation came at a time when the purchasing power of consumers had increased exponentially. When India crossed the per capita income of US$ 2000, there was a noticeable change in the demand curve and cars that were once considered aspirational purchases, started becoming affordable for most Indians.
The Indian auto industry is today internationally recognized and respected, and all types of automobiles, components and technologies are exported to almost every part of the world. A further manifestation of our growing maturity is that many Indian brands like Tata, Mahindra, Bajaj, Hero, TVS and Royal Enfield have set up manufacturing operations overseas. Auto component makers have also followed suit and now have global manufacturing footprints too.
Over the last 5 years the industry has also witnessed many changes not only in automotive products but also in concepts of mobility. The emphasis is now on green technology, hence, the move towards electric vehicles & hybrid vehicles that are safe, efficient, reliable and environmentally sustainable. In addition to environmental concerns, cleaner emissions are also a part of safety requirements. To this end, the Bharat New Vehicle Safety Assessment Programme (BNVSAP) has laid strict guidelines in keeping with the international standards.
As India celebrates the 75th anniversary of its birth as a nation, we celebrate the phenomenal success of the Indian automobile industry. However, much of this success is because of the Government of India’s growth-enhancing policies and schemes, for example, production-linked incentives, the push towards self-reliance, as well as increased infrastructure spending, among others. All these have given the industry an impetus that augurs well for future growth and development.
As the Indian automobile industry moves into the post-pandemic era, the major focus for the next 25 years would be on future technologies like BEV, hydrogen, hybrids, flex fuel, ethanol and biomethane; however, these would require some enablers and constant support from the Government to develop and promote the usage of alternate fuels and to boost the changing infrastructural growth for faster penetration of EVs.
Over the next few years, the focus of the Indian automobile industry will be on R&D, the bedrock of any successful industry, so that manufacturing processes and procedures will be at par with the European and US standards. The Indian automobile industry is expected to be almost 100% self-reliant by 2047, as it moves towards a greener and more sustainable future. The vision of being among top 2 in every segment of automobiles is more than achievable now.
This article was contributed by Anjali Singh, Vice Chairperson, CII Haryana & Executive Chairperson, ANAND Group and was first published in CII Northern Insights, September 2022 issue.