Automobile

The automobile sector contributes approximately 6% to India's national GDP, with exports reaching 4.5 Mn units across all categories in fiscal year 2023-24, including 6,72,105 passenger vehicles and 3.45 Mn 2-wheelers. Global automotive companies like Skoda Auto Volkswagen India exporting 30% of their production and Maruti Suzuki exporting around 2,80,000 units annually, exemplify this trend. 

The sector has attracted $36 Bn 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 Bn (INR 33,200 Cr) expansion, while Mercedes-Benz has pledged $360 Mn (INR 3,000 Cr). Recently, Toyota announced a $2.3 Bn (INR 20,000 Cr) investment to further increase its capacity. The allowance of 100% FDI under the automatic route in India's automotive sector further enhances its attractiveness to investors, making the country a compelling destination for a global automotive hub.

Domestic demand remains strong, with over 20 Mn vehicles registered in 2023. The country is also advancing in sustainable mobility, with 4.4 Mn Electric Vehicles registered by August 2024, including 9,56,000 in the first eight months of 2024, achieving a 6.6% market penetration. To support this growth, the government has implemented initiatives such as the Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) battery storage. In the 2024-25 Budget, the government allocated INR 2,671.33 Cr under the FAME scheme and proposed the exemption of customs duties from the import of critical minerals required for EV cell components manufacturing. Additionally, in March 2024, the Electric Mobility Promotion Scheme (EMPS) was launched with an INR 500 Cr outlay for four months, specifically targeting support for the two- and three-wheeler segments to expedite the transition to electric vehicles. These initiatives align with the recent discovery of lithium deposits in Jammu & Kashmir, positioning India to become a key player in the global battery manufacturing industry in the coming years.