Running in the top gear

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

The Automobile industry of India, currently manufactures 26 mn vehicles including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers, and quadricycles in April-March 2020, 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.

  • The EV market is expected to grow at CAGR of 44% between 2020-2027 and is expected to hit 6.34 million-unit annual sales by 2027. The EV industry will create five crore direct and indirect jobs by 2030. 
  • A market size of $50 bn for the financing of EVs in 2030 has been identified—about 80% of the current size of India’s retail vehicle finance industry, worth $60 bn today
  • India's passenger vehicle industry is expected to post a growth of 22% - 25% in FY22

100% FDI allowed under automatic route

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  • %

    Share in India's GDP

  • mn

    Employment generated

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    Share in global R&D

  • %

    Share in India's exports

Explore Related Sub Sectors

World's largest tractor manufacturer and second largest bus manufacturer

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

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 in FY 2020 was 26.36 Mn vehicles.

In the Automobile market in India, Two-wheelers and passenger cars accounted for 80.8% and 12.9% market share, respectively, accounting for a combined sale of over 20.1 mn vehicles in FY20. Passenger car sales are dominated by small and midsized cars.

Overall, Indian automobile export reached 4.77 million vehicles in FY20, implying a CAGR of 6.94% between FY16-FY20. Two-wheelers constituted 73.9% of the total vehicles exported, followed by passenger vehicles at 14.2%, three-wheelers at 10.5%, and commercial vehicles at 1.3%.


  • 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.

  • Atmanirbhar Bharat Abhiyaan - Self Reliant India

    Special economic and comprehensive package of INR 20 lakh crores towards promoting manufacturing in India


Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in the Automobile and Auto Components sectors for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.

  • INR 57,042 cr

    Scheme Outlay

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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.

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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

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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.

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Is it necessary to sold sell old gasoline based vehicles to get subsidy under FAME India Scheme?

No, there is no such condition in the present guidelines.

For more information, please visit the following link.

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How do citizen avail the demand incentive on the purchase of a xEV?

The demand incentive benefit will be passed on to the consumer upfront at the time of purchase of the xEV itself by way of paying reduced price.

For more information, please visit the following link.

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