AUTOMOBILE INDUSTRY IN INDIA

India's electric vehicle (EV) market is estimated to be a Rs. 50,000 crore opportunity by 2025, with two- and three-wheelers expected to drive higher electrification of the vehicles.

In 2020, India was the fifth-largest auto market, with 3.49 million units combined sold in the passenger and commercial vehicles categories. It was the seventh largest manufacturer of commercial vehicles in 2019.

 

The two wheelers segments dominate the market in terms of volume owing to a growing middle class and a young population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector.

 

India is also a prominent auto exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India and major automobile players in the Indian market are expected to make India a leader in the two-wheeler and four-wheeler market in the world by 2020.

 

Domestic automobiles production increased at 2.36% CAGR between FY16-20 with 26.36 million vehicles being manufactured in the country in FY20. Overall, domestic automobiles sales increased at 1.29% CAGR between FY16-FY20 with 21.55 million vehicles being sold in FY20.

 

In FY21, the total passenger vehicles production reached 22,652,108.

 

Overall, production of passenger vehicles, three wheelers, two wheelers and quadricycle reached 1,875,698 units in April 2021.

 

Two wheelers and passenger vehicles dominate the domestic Indian auto market. Passenger car sales are dominated by small and mid-sized cars. Two wheelers and passenger cars accounted for 80.8% and 12.9% market share, respectively, accounting for a combined sale of over 20.1 million vehicles in FY20. Two-wheeler sales stood at 995,097 units, while passenger vehicle sales stood at 261,633 units in April 2021.

 

Overall, automobile export reached 4.77 million vehicles in FY20, growing at a CAGR of 6.94% during FY16-FY20. Two wheelers made up 73.9% of the vehicles exported, followed by passenger vehicles at 14.2%, three wheelers at 10.5% and commercial vehicles at 1.3%.

 

EV sales, excluding E-rickshaws, in India witnessed a growth of 20% and reached 1.56 lakh units in FY20 driven by two wheelers. According to NITI Aayog and Rocky Mountain Institute (RMI) India's EV finance industry is likely to reach Rs. 3.7 lakh crore in 2030. A report by India Energy Storage Alliance estimated that EV market in India is likely to increase at a CAGR of 36% until 2026. In addition, projection for EV battery market is forecast to expand at a CAGR of 30% during the same period.

 

Premium motorbike sales in India recorded seven-fold jump in domestic sales, reaching 13,982 units during April-September 2019. The luxury car market is expected to register sales of 28,000-33,000 units in 2021, up from 20,000-21,000 units sold in 2020. The entry of new manufacturers and new launches is likely to propel this market in 2021.

 

 

In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry has attracted Foreign Direct Investment (FDI) worth US$ 25.40 billion between April 2000 and December 2020, according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

In FY21, passenger vehicles sales reached 27.11 lakhs units, two-wheelers reached 151.19 lakhs units, commercial vehicles sales reached 5.69 lakhs units and for three-wheelers it was 2.16 lakhs units.

 

In 2019-20, the total passenger vehicles sales reached 2.8 million, while 2.7 million units were sold in FY21.

 

In February 2021, the Delhi government started the process to set up 100 vehicle battery charging points across the state to push adoption of electric vehicles.

 

In January 2021, Fiat Chrysler Automobiles (FCA) announced an investment of US$ 250 million to expand its local product line-up in India.

 

A cumulative investment of Rs. 12.5 trillion (US$180 billion) in vehicle production and charging infrastructure would be required until 2030 to meet India’s electric vehicle (EV) ambitions.

 

In January 2021, Lamborghini announced it is aiming to achieve sales in India higher than the 2019-levels, after recovering from pandemic-induced disruptions.

 

In January 2021, Tesla, the electric car maker, set up a R&D centre in Bengaluru and registered its subsidiary as Tesla India Motors and Energy Private Limited.

 

In November 2020, Mercedes Benz partnered with the State Bank of India to provide attractive interest rates, while expanding customer base by reaching out to potential HNI customers of the bank.

 

Hyundai Motor India invested Rs. 3,500 crore in FY20, with an eye to gain the market share. This investment is a part of Rs. 7,000 crore commitment made by the company to the Tamil Nadu government in 2019.

In October 2020, Kinetic Green, an electric vehicles manufacturer, announced plan to set up a manufacturing facility for electric golf carts besides a battery swapping unit in Andhra Pradesh. The two projects involving setting up a manufacturing facility for electric golf carts and a battery swapping unit will entail an investment of Rs. 1,750 crore.

 

In October 2020, Japan Bank for International Cooperation (JBIC) agreed to provide Rs. 7,400 crore to SBI (State Bank of India) for funding the manufacturing and sales business of suppliers and dealers of Japanese automobile manufacturers and providing auto loans for the purchase of Japanese automobiles in India.

 

In October 2020, MG Motors announced its interest in investing Rs. 1,000 crore to launch new models and expand operations in spite of the anti-China sentiments.

 

In October 2020, Ultraviolette Automotive, a manufacturer of electric motorcycle in India, raised a disclosed amount in a series B investment from GoFrugal Technologies, a software company.   

 

In September 2020, Toyota Kirloskar Motors announced investments of more than Rs 2,000 crore in India directed towards electric components and technology for domestic customers and exports.

 

During early September 2020, Mahindra & Mahindra singed a MoU with Israel-based REE Automotive to collaborate and develop commercial electric vehicles.

 

In April 2020, TVS Motor Company bought UK’s iconic sporting motorcycle brand, Norton, for a sum of about Rs. 153 crore, making its entry into the top end (above 850cc) segment of the superbike market.

 

In March 2020, Lithium Urban Technologies partnered with renewable energy solutions provider, Fourth Partner Energy, to build charging infrastructure across the country.

 

In January 2020, Tata AutoComp Systems, the auto-components arm of Tata Group entered a joint venture with Beijing-based Prestolite Electric to enter the electric vehicle (EV) components market.

 

The Government of India encourages foreign investment in the automobile sector and has allowed 100% foreign direct investment (FDI) under the automatic route.

 

In Union Budget 2021-22, the government introduced the voluntary vehicle scrappage policy, which is likely to boost demand for new vehicles after removing old unfit vehicles currently plying on the Indian roads.

In February 2021, the Delhi government started the process to set up 100 vehicle battery charging points across the state to push adoption of electric vehicles.

 

The Union Cabinet outlaid Rs. 57,042 crore for automobiles & auto components sector in production-linked incentive (PLI) scheme under the Department of Heavy Industries.

 

The Government aims to develop India as a global manufacturing centre and a Research and Development (R&D) hub.

 

Under NATRiP, the Government of India is planning to set up R&D centres at a total cost of US$ 388.5 million to enable the industry to be on par with global standards.

 

The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for introduction of EVs in their public transport systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The Government will also set up incubation centre for start-ups working in the EVs space.

 

In February 2019, the Government of India approved FAME-II scheme with a fund requirement of Rs. 10,000 crore for FY20-22.

 

In H12019, automobile manufacturers invested US$ 501 million in India’s auto-tech start-ups according to Venture intelligence.

 

Investment flow into EV start-ups in 2019 (till end of November) increased nearly 170% to reach US$ 397 million.

 

On 29th July 2019, Inter-ministerial panel sanctioned 5,645 electric buses for 65 cities.

 

NATRiP’s proposal for “Grant-In-Aid for test facility infrastructure for EV performance Certification from NATRIP Implementation Society” under the FAME Scheme was approved by Project Implementation and Sanctioning Committee (PISC) on 3rd January 2019.

 

Under NATRiP, following testing and research centres have been established in the country since 2015.

 

International Centre for Automotive Technology (ICAT), Manesar National Institute for Automotive Inspection, Maintenance & Training (NIAIMT), Silchar National Automotive Testing Tracks (NATRAX), Indore Automotive Research Association of India (ARAI), Pune Global Automotive Research Centre (GARC), Chennai SAMARTH Udyog - Industry 4.0 centres: ‘Demo cum experience’ centres are being set up in the country for promoting smart and advanced manufacturing helping SMEs to implement Industry 4.0 (automation and data exchange in manufacturing technology).

 

The automobile industry is supported by various factors such as availability of skilled labour at low cost, robust R&D centres, and low-cost steel production. The industry also provides great opportunities for investment and direct and indirect employment to skilled and unskilled labour.

 

Indian automotive industry (including component manufacturing) is expected to reach Rs. 16.16-18.18 trillion by 2026.

 

The Indian auto industry is expected to record strong growth in 2021-22, post recovering from effects of COVID-19 pandemic. Electric vehicles, especially two-wheelers, are likely to witness positive sales in 2021-22.

 

A study by CEEW Centre for Energy Finance recognised US$ 206 billion opportunity for electric vehicles in India by 2030.

If you like the information. So tell us in comment section and follow the page so that you can get the information of the posts first.