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Running in the top gear

With a current annual production of 29 mn vehicles and export of 4 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, India holds a strong position in the international heavy vehicles arena.

The sector attracted USD  17.9 bn FDI between April 2000 and September 2017, contributing 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 and fourth largest car producer

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.

  • The sector is expected to grow to 135 bn by 2020 and 300 bn by 2026 at a CAGR of 15%
  • The sub-sectors contribution to the overall market (2017-18):
    •  2-Wheelers: 81%
    •  Passenger Vehicles: 13%
    •  3-Wheelers: 3%
    •  Commercial Vehicles: 3%
  •   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 Passenger Vehicles and Commercial Vehicles category, are 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 in global R&D


  • Share in India's total exports


Key policies

Automotive Mission Plan (2016-26)

India targets to be among the top three globally in terms of engineering, manufacturing and export of vehicles & auto components

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 Auto Policy 2018

The objectives of the National Auto Policy will be met through policy interventions across five identified focus areas:

1. Innovation, Research and Development

2. Vehicle Manufacturing

3. Auto Component Manufacturing in India

4. Green Mobility

5. Eco-system development

National Electric Mobility Mission Plan 2020 (NEMMP)

The National Mission for Electric Mobility 2020 was launched on 9 January, 2013 for faster adoption of electrical vehicles (including hybrid vehicles), and their manufacture in India. NEMMP seeks to encourage reliable, affordable and efficient production of electric vehicles that meet  performance and price expectations through government- industry collaboration , improved infrastructure, consumer awareness and technology.,  These initiatives would help India emerge as a leader in the electric vehicles  market globally by 2020, with total anticipated sales of around 6-7 mn units. It is estimated that there will be greater demand in India for low-cost EVs that are suited for safe short-distance urban commute (average 50-100 km/trip).

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

A total of USD 388.5 mn would be spent under NATRiP to create state-of-art research and testing infrastructure. The initiative would enable the industry to adopt and implement global performance standards and also to focus on providing low-cost manufacturing and product development solutions.

FDI Facts

  • Jump in FDI from 2014 - 2016

  •  Investments in automobile industry over 2000-17

  • Share in total FDI inflows

Recent Investments

  • May 2018 - JSW Energy plans to double its investment to USD 956.1 mn for its electric vehicle manufacturing unit

  • March 2018 - MG Motors India is looking to invest USD 735.5 mn in product development, plant, marketing & electric vehicles

  • March 2018 - Setco Automotive plans to invest approximately USD 35 mn in capacity expansion and plant modernization

  • March 2018 - Maxxis Tyres launches first Indian plant at an investment of USD 388.3 mn

  • February 2018 - Essel Infraprojects plans to invest USD 625.1 mn in Electric Vehicles in the state of Uttar Pradesh

  • February 2018 - Suzuki is looking to invest USD 3 bn in India over the next 3 years

Major Investors