When it comes to manufacturing two-wheelers and three-wheelers, India leads the world. Its tractors are renowned the world over. As for other cars, India ranks as the fifth-largest manufacturer, behind the usual players’ China, the US, Japan, and Germany. But experts claim and numbers support that by 2026 India will take over Japan and Germany as the third largest automobile manufacturer. As of right now India’s automobile industry counts for 7.1% of the country’s GDP and has created 35 million jobs.
However, if we look back two years, just like other industries, the automobile industry also took a hit due to the COVID outbreak, and compared to others the hit was quite severe. But on the upside, the exports remained not only steady, but even increased in numbers, and now with the pandemic slowly dying down, we are also seeing a resurgence in automotive demand in PAN India meaning all across the country.
India’s standing in the world’s automobile industry
When we look at India’s automobile industry, we see signs of growth and we remain hopeful that we will soon overcome all the damage done by the pandemic. But all this will require direct government intervention and thankfully the Indian government is taking steps to not only accommodate the automobile industry but also bring it into the future.
Electric vehicles are the future and the government has lowered the GST on them by 12% for the year 2022, which is a good step. Furthermore, the government also introduced a vehicle scrapping policy, which will greatly boost the sale of both commercials as well as personal vehicles. Not only that but as part of its Delhi-Mumbai Green Corridor government plans to develop an electric highway. When added up, all these measures will lead towards a robust and self-sufficient automobile industry in India
Other advantages that give India leverage over other countries are as follows:
• Access to skilled labor, land, and power
• A large pool of engineering talent emerging each year
• An English-speaking country that is conducive to export business
• Over the previous two decades, connectivity has vastly improved
• Increased access to capital
• Improved intra-country supply chain due to unified taxes (GST)
Furthermore, India is also making an effort to reduce carbon emissions, by introducing the National E-Mobility program. Through this program, the Indian government wants to make sure that by 2030 about 30% of vehicles operating on the road are electric vehicles. That is why they are incentivizing petroleum companies to set up electric vehicle charging stations in petrol pumps around the country.
Hurdles to be removed
Big dreams come with big challenges and there are quite a few hurdles that need to be removed before India’s automobile industry can reach the top place. To start with, most automobile businesses are still quite labor-intensive. Even though labor costs in India are low, we still need to focus on automation as it is the future. Another thing we need to take a look at is the international market. Yes, the Indian market is big, but we also need to focus on exports. There is a huge demand for high-quality vehicles in the international market and India can easily fulfill that demand by investing diligently in its automotive sector.
What does the future hold?
As we are slowly moving away from the monotony of pandemic life, we are witnessing the revival of the auto industry in India, where car sales are at an all-time high and these are going to increase exponentially in the coming years. Even then India considerably lags behind other major countries when it comes to the number of car owners, as here out of 1000 people only 22 own a car.
The Indian economy will soon cross the 5 trillion-dollar threshold, which will greatly increase the purchasing power of everyday Indians. This will only lead to more Indians buying cars and as this happens India’s automotive industry should be ready to accommodate them.
It is estimated that by 2030, of every 1000 Indians, 70 will own a car and a large number of those cars will be either electric or hybrid. This means India’s automotive industry will not only have to ramp up its production to meet the growing demands but also invest in electric vehicle research and meet the future head-on.