Running in the top gear

India is expected to be the world's third-largest automotive market in terms of volume by 2026.

The industry currently manufactures 26 mn vehicles, of which 4.7 mn are exported. India holds a strong position in the international heavy vehicles arena as it is the largest tractor manufacturer, second-largest bus manufacturer and third largest heavy trucks manufacturer in the world.

In April-March 2020, overall automobile exports registered a growth of 2.95 %. Passenger Vehicles exports marginally increased by 0.17 % and Two wheelers exports registered a growth of 7.30 % in April-March 2020 over the same period last year.

The sector attracted $24.2 bn FDI during April 2000 - March 2020; accounting for 5.1% of the total FDI inflows.

100% FDI allowed under automatic route

For further details, please refer FDI Policy

  • %

    Share in India's GDP

  • mn

    Employment generated

  • %

    Share in global R&D

  • %

    Share in India's exports

Tractor Industry in India

World's largest tractor manufacturer and second largest bus manufacturer

Two Wheeler Industry in India

World’s largest two-wheeler and three-wheeler manufacturer

Indian Automobile Industry

World’s third largest heavy truck manufacturer and fourth largest car manufacturer

Industry Scenario

The $118 bn Automobile industry is expected to reach $300 bn by 2026.

India's annual production has been 29.08 mn vehicles in 2018 as against 25.33 mn in 2017, registering a healthy growth of 14.8%. 

India is expected to emerge as the world’s third-largest passenger vehicle market by 2021. In FY 2018-19, sale of passenger vehicles has increased by 2.70%, two-wheeler by 4.86% and three-wheeler by 10.27% as compared to FY 2017-18.

In April-March 2019, overall automobile exports grew by 14.50%. The overall Commercial Vehicles segment registered a growth of 17.55% in April- March 2019.


  • Growing income

    3X increase in average household income from $6,393 in 2010 to $18,448 in 2020

  • 'Youngest Nation' by 2025

    India to become the youngest nation by 2025 with an average age of 25 years

  • Vehicle penetration

    Expected to reach 72 vehicles per 1000 people by 2025

  • Expanding R&D hub

    India accounts for 40% of total $31 bn of global engineering and R&D spend. 8% of the country’s R&D expenditure is in the automotive sector.

Major Investors

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Asked Questions

Which are the concerned government divisions/services for auto and auto-parts?

The Department of Heavy Industries, Government of India, deals with areas related to vehicles and automotive parts. Entire Automotive industry falls under the concern of Heavy Industries Department.

For more information, click here.

For how long the incentives for the electric and hybrid vehicles of the FAME scheme are applicable?

The Union cabinet chaired by the Prime Minister Shri Narendra Modi has approved the proposal for implementation of scheme titled 'Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II)' for promotion of Electric Mobility in the country from 2019-20 to 2021-2022

For more information, click here

Is the FAME incentive applicable for multiple xEV purchases by a customer? Or is it possible to get subsidy for bulk orders on a single person’s name or on single company’s names?

Yes, an individual may buy multiple xEVs and avail the demand incentive applicable for each of them.
Please visit the link for more information.

It is said that Electric Vehicles (EV) are also called as Emission Elsewhere Vehicle (EEV). Is it true that EVs are just transferring emission from city area to the place where power is being generated?

The fact is that a typical conventional hatchback has 130-140 gm/km of CO2 emission comparing to an electric vehicle for 100 gm/km when charged by grid and when solar charged, there is ~0 gm/km CO2 emission from an electric vehicle.
Please visit the link for more information.

What is the Faster Adoption and Manufacturing of hybrid and Electric vehicles (FAME) scheme?

The FAME scheme introduced in April 2012 is to be implemented over a period of 6 years till 2020 to support hybrid/electric vehicles market development and its manufacturing. Under this scheme, demand incentives will be availed by buyers (end users/consumers) upfront at the point of purchase and the same shall be reimbursed by the manufacturers from Department of Heavy Industries, on a monthly basis.


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Authored By:
Pranati Chestha Kohli

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