Blitz Bureau
NEW DELHI: LAUNCHED in 2014, the Make in India initiative has significantly transformed India’s automobile industry, fostering domestic car production and accelerating electric vehicle (EV) manufacturing. Over the past decade, policy reforms, fiscal incentives, and infrastructure development have positioned India as a key global automotive hub. The sector has attracted substantial investments, spurred innovation, and increased localisation, contributing to economic growth and sustainability.
The Indian auto industry is one of the fastest-growing sectors. It embarked on a new journey in 1991 with the de-licensing of the sector and subsequent opening up for 100 per cent FDI through the ‘automatic route’. Since then, almost all the global majors have set up their manufacturing facilities in India, taking the level of production of vehicles from 2 million in 1991-92 to around 28 million in 2023-24.
Employment support
The turnover of the Indian automotive industry is about $240 billion (Rs 20 lakh crore), which translates into a large contribution to the country’s economy and manufacturing sector. As per the annual report 2024-25 of the Ministry of Heavy Industries, around 30 million jobs (direct: 4.2 million and indirect: 26.5 million) are supported by the auto industry. The industry exported vehicles and auto components amounting to about $35 billion.
In terms of global standing, India is the largest manufacturer of threewheelers, among the Top Two manufacturers of two-wheelers in the world, the Top Four manufacturers of passenger vehicles, and the Top Five manufacturers of commercial vehicles in the world.
Components sector
The auto component sector is one of the key pillars of India’s manufacturing industry, supplying critical parts and systems to domestic vehicle manufacturers and exporting to major global markets. The industry covers a broad spectrum of products, including engine parts, transmission systems, braking systems, electrical and electronics components, body and chassis parts, and more. India has become a preferred destination for auto component manufacturing due to its cost competitiveness, skilled workforce, and strong policy support. The auto component sector is expected to reach the $100-billion export target by 2030 making the sector one of the largest job creators in the country.
The component sector contributes 2.3 per cent to India’s GDP, directly employing over 1.5 million people. The sector’s turnover in FY24 was Rs 6.14 lakh crore ($74.1 billion), with domestic OEM supplies making up 54 per cent, and exports contributing 18 per cent. The auto components industry exports over 25 pc of its production annually. By FY28, it aims to invest $7 billion to boost the localisation of advanced components like electric motors and automatic transmissions by reducing imports and leveraging the ‘China + One’ trend. In 2023, the auto component industry achieved a 5.8 pc reduction in imports over two years.
The majority of the components sold to Original Equipment Manufacturers (OEMs) are engine components (26 pc), body/chassis/BIW (14 pc), suspension and braking (15 pc), drive transmission and steering (13 pc), and electricals & electronics (11 pc). Major exports are to Europe ($6.89 billion), followed by North America ($6.19 billion) and Asia ($5.15 billion).
FDI commitments
The automobile sector contributes approximately 6 per cent to India’s national GDP, with exports reaching 4.5 million units across all categories in FY 2023-24, including 6.72 million passenger vehicles and 3.45 million two-wheelers.
The sector has attracted $36 billion in foreign direct investment (FDI) over the past four years, highlighting India’s growing prominence in the global automotive landscape. Major international players are making substantial commitments, with Hyundai planning a $4 billion (Rs 33,200 Crore) expansion, while Mercedes-Benz has pledged $360 million (Rs 3,000 crore). Recently, Toyota announced a $2.3 billion (Rs 20,000 crore) investment to further increase its capacity.
