India’s automotive journey began in In 1897, with the first car on its roads Owned by an Englishman, who was boss of the company Crompton Greaves, it was a French DeDion, which according to newspaper reports at the time terrified the residents of Kolkata. A year later, Jamshedji Tata became the first Indian to own a car, and in 1948, the country manufactured its first ever car – The Hindustan 10.
The rest, as they say, is history.
India: an attractive location for automakers
Currently, India’s auto industry is worth more than $100 billion and contributes 8% of the country’s total exports, accounting for 2.3% of India’s GDP. One factor for its growth has been the introduction of the Production-Linked Incentive (PLI) Scheme in the Automobile and Auto Components sectors. The PLI scheme offers financial incentives to domestic manufacturers of advanced automotive technology products and attracts investment throughout the automotive value chain. This has helped the industry accelerate its growth and will ensure India’s manufacturing sector is competitive moving forward.
In addition, under the Indian Government’s Automotive Mission Plan 2016-26, India aims to produce 13 million passenger vehicles, 3.9 million commercial vehicles, and 55 million two-wheelers by 2026. This vision aims to generate 65 million more jobs, grow the industry by as much as four times its value, and improve the various segments of the automotive and auto component industries. With this backing from the Indian government, the automotive sector has grown its contribution to India’s GDP, and now has a global footprint in technology, competitiveness, and expertise.
Perhaps equally important has been the government’s ‘Make in India’ initiative, launched by Narendra Modi in 2014. It aims to create and encourage companies to develop, manufacture and assemble products made in India and incentivise dedicated investments into manufacturing. Automotive has been at the heart of this, with Tata Motors investing hundreds of millions in total investment in the commercial vehicle business and the development of the passenger vehicle business. Tata Motors has the ambitious target of becoming the third-largest commercial vehicle manufacturer in the world, hoping to disrupt the major players from Japan, Germany, China, and the United States.
This initiative has also attracted foreign automakers, with Volkswagen and KIA investing in India to develop new models. By 2021, South Korea’s second-largest automobile manufacturer, Kia Motors, intends to increase regional investments to $2 billion. Lately, Suzuki Motor Corp has also announced investments of around $3 billion over the next three years to maintain its position in the Indian passenger vehicle market, consolidating India as an hub for automotive excellence and innovation.
What about electric vehicles?
The Indian EV market is grew 223% in 2022, and sentiment remains bullish.
India’s EV market is moving from being an assembly market to becoming an EV technology leader. Again, the government has been helping encourage development with its FAME India Phase II scheme, that promotes rapid nationwide EV adoption through incentives to EV manufacturers.
Tata Motors has been spearheading this, selling an electric version of its Tiago hatchback that only costs $800 or so more than the petrol version, encouraging an uptick Ein V production from other automakers in the region.
In January this year, India was home to the Auto Expo, which brought together leading figures across the global industry. The show was a fabulous platform for India’s growth and potential. It spotlighted just how far the country has come in a short time and how much more it is about to achieve.