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Running in the top gear

With a current annual production of 25 mn vehicles and export of 3.5 mn, the Indian auto industry is expected to be the world's third-largest automotive market by volume by 2026.

As the largest tractor manufacturer, second largest bus manufacturer and third largest heavy trucks manufacturer globally, the country holds a strong position in the international heavy vehicles arena.

The sector has attracted USD 17.9 bn FDI from April 2000 to September 2017; contributing to 5% of the total FDI inflows.

100% FDI allowed under automatic route

For more details refer FDI Policy 2017


  • World's largest tractor manufacturer
  • World’s second largest two-wheeler market
  • World’s third largest heavy truck manufacturer

Industry Scenario

Known as the Sunrise sector of India, the USD 74 bn auto industry is expected to grow to USD 300 bn by 2026.

  •   Expected to grow to 135 bn by 2020 and 300 bn by 2026 at a CAGR of 15%
  • The sub-sectors contributing to the growth include:
    •  Passenger Vehicles (market share of 14%): Growing at 9.2%
    •  2-Wheelers (market share of 80%): Growing at 6.9%
    •  Commercial Vehicles (market share of 14%): Growing at 4.2%
  •   India's rapidly growing 5 auto hubs have a significant potential to be used as a base for export to SEA and MENA regions.
  •   Exports in the Sub-sectors of Passenger Vehicles and Commercial Vehicles, growing rapidly at the rate of 16.2% and 5% respectively​​​​​​

    Growth Drivers

    Auto GD
    • Share in India's GDP


    • Employment generated

      19 mn

    • Share of global R&D


    • Share in India's total exports


    Key policies

    Automotive Mission Plan (2016-26)

    Targets India to be among the top three in the world for engineering, manufacturing and export of vehicles & auto components

    National Electric Mobility Mission Plan 2020 (NEMMP)

    The National Mission for Electric Mobility 2020 was launched on 9 January, 2013 to faster adoption of electrical vehicles (including hybrid vehicles), and their manufacture in India to encourage reliable, affordable and efficient electric vehicles that meet consumer performance and price expectations through government industry collaboration for promotion and development of indigenous manufacturing capabailities, required infrastructure, consumer awareness and technology, helping India emerge as a leader in the electric vehicles two-wheeler and four-wheeler market in the world by 2020, with total anticipated sales of around 6-7 mn units.It is estimated that there will be excellent demand in India for low-cost xEVs that are suited for safe short-distance urban commute (average 50-100 km/trip), and are rugged enough to perform reliably through the most hot climatic conditions that also see torrential monsoon rains for 3-4 months of the year.

    Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME)

    Offers incentives on electric and hybrid vehicles of up to USD 430 for bikes and USD 2050 for cars

    National Automotive Testing And R&D Infrastructure Project (NATRiP)

    A total of USD 388.5 mn to enable the industry to adopt and implement global performance standards. Focus on providing low-cost manufacturing and product development solutions.​

    FDI Facts

    • Jump in FDI from 2014 - 2016

    • Sectoral investments (in USD) for automobile industry from April 2000 - September 2017

    • Share of total FDI inflows

    Recent Investments

    • June 2017 - Chinese car maker SAIC to commence India operations in 2019.

    • April 2017 - Kia Motors to set up a USD 1 bn car plant in Andhra Pradesh

    • January 2017 - Peugeot to enter India by 2020 in JV with CK Birla Group

    • November 2016 - Ford to invest USD 195 mn on new technology facility in Chennai

    Major Investors