. Modi said that the automobile sector “will be a key driver of India’s growth from the fifth to the third largest economy in the world.”
is one of the key pillars of the growing economy in India, contributing about 7 percent to our GDP. Besides, it employs close to four crore people directly or indirectly across the country. That said, it is worth mentioning that it also contributes extensively to our exports.
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With India eyeing a shift towards clean mobility, the central government has also introduced schemes such as PLI (Production Linked Incentives) and the FAME (Faster Adoption and Manufacturing of (Hybrid) & Electric Vehicles). In fact, Union Minister of Heavy Industries, Mahendra Nath Pandey, today announced that the PLI scheme has been extended by one year.
With the introduction of the afore-mentioned schemes and a push towards adopting green mobility, legacy players have started to enter the electric vehicle segment while some like Tata Motors have already managed to establish their dominance. On the other hand, startups have emerged to contribute to the growth of the EV ecosystem, encouraged by the subsidies and incentives introduced by the centre. This, on a whole, has further expanded the industry.
Going by the sales clocked in 2022, India has surpassed Japan to become the third largest automobile market in the world, trailing behind China and the US only. On the other hand, leading manufacturers of EVs from both the countries have reportedly shown strong interest in setting up manufacturing facilities on our shores.
However, the Indo-China border tensions have put the Chinese investments under the scanner of the government, it has surely paved a path for Elon Musk-led Tesla’s entrance into the Indian market.
The Auto Inc, having faced growth roadblocks such as semiconductor shortages and rising raw material prices in the post-Covid period, seems to return back to the growth trajectory following a temporary slowdown. The revival is gauged by the fact that many OEMs have recently achieved their highest-ever sales figures in the recent months including Maruti Suzuki, Hyundai, and Mahindra, to name a few.
The Indian automobile industry is expected to grow at a CAGR of 8.1 percent in the coming years to reach a value of $160 billion in 2027.