Automobile
The Indian automobile industry has historically been a good indicator of how well the economy is doing, as the automobile sector plays a key role in both macroeconomic expansion and technological advancement. The two-wheelers segment dominates the market in terms of volume, owing to a growing middle class and a huge percentage of India’s population being young.
India is aiming for higher growth in EV adoption. The auto sector’s exports are growing, especially to key markets in Asia, Europe, and the Americas, with strong demand for Indian-made vehicles, including passenger cars, motorcycles, and electric vehicles. India also exports a range of components to global manufacturers. However, the Indian automobile industry faces challenges, such as semiconductor shortages and fluctuating fuel prices. The government's push towards the green transition, through incentives for electric vehicle production, aims to address these challenges and increase the country's share in global markets for sustainable automotive technologies.
The key schemes and visions for the future include the extension of the FAME scheme and the further implementation of the PLI to promote the manufacturing of EVs and the development of advanced automotive technology. Additionally, India is focusing on improving its electric vehicle infrastructure and setting ambitious targets for EV sales by 2030, despite current sales being slower than anticipated
In 2024, India’s automotive industry has witnessed steady growth in both exports and imports. India’s automobile exports saw an increase, with 672,105 units exported in FY2024, compared to 662,703 units in FY2023. Leading automotive brands such as Maruti Suzuki, Hyundai, and Tata Motors have bolstered this export growth, especially in markets like Southeast Asia, the Middle East, and Africa. Maruti Suzuki, for instance, saw a 10% increase in exports, with 280,712 units shipped abroad. Additionally, India’s entry into the electric vehicle (EV) sector is gaining momentum, supported by government policies such as the Production-Linked Incentive (PLI) Scheme, which encourages local production and export of electric vehicles and components. The National Electric Mobility Mission Plan (NEMMP) 2024 is designed to make India a global leader in electric vehicle production and exports.
On the import side, India continues to bring in high-end vehicles and essential automotive components, particularly electronics, batteries, and engine parts, to support domestic manufacturing and the rising demand for electric vehicles. The import of luxury vehicles from brands like Mercedes-Benz and BMW remains strong, along with the influx of specific auto components necessary for advanced manufacturing.
In India-Asia Pacific, India’s exports to ASEAN nations such as Vietnam, Indonesia, and Thailand have increased, with a 15% rise expected in FY2024. These markets continue to favor Indian-made small cars and two-wheelers due to competitive pricing. India is also benefiting from the growing demand for electric vehicles, with a strong push to expand EV exports to these nations.
In India-Gulf, India remains a significant exporter of vehicles to UAE, Saudi Arabia, and other GCC countries. The automotive trade in 2024 is expected to increase, especially with the UAE, which serves as a key hub for the region’s automotive market. India exports both affordable vehicles and high-end models, with strong demand for two-wheelers and passenger cars. The Comprehensive Economic Partnership Agreement (CEPA) with the UAE further strengthens automotive trade between the countries.
In India-Europe, exports of budget-friendly cars and auto components are on the rise, particularly to countries like Germany, France, and Italy. The European market’s increasing demand for electric vehicles has opened new avenues for Indian automakers, as they focus on producing greener and more efficient cars. The growth of EV exports to Europe is expected to continue, especially with the EU's growing emphasis on sustainability.
In India-America, the United States remains one of the largest importers of Indian automobiles, with exports valued at approximately $4.5 billion in 2023. India exports a variety of vehicles, including passenger cars and auto parts. The U.S. is also a significant market for Indian electric vehicle components, and this is set to grow as India’s EV production ramps up.
In India-Africa, automotive exports are increasing, with countries like South Africa, Nigeria, and Kenya being major markets for affordable cars and two-wheelers. The demand for Indian vehicles in Africa is rising due to their cost-effectiveness, and India is also helping to set up assembly plants in the region. India’s ties with Africa are growing as both regions explore ways to enhance trade and automotive manufacturing capabilities.
Finally, in India-CIS, trade relations with countries like Russia, Kazakhstan, and Uzbekistan are steadily improving. Indian exports of cars, buses, and auto components to the CIS region have increased, driven by competitive pricing and the demand for affordable vehicles. The trade relationship in the automotive sector continues to strengthen as India expands its footprint in these markets, particularly in the areas of electric vehicles and auto components.
India’s focus on electric vehicles, supported by government schemes and a growing export market, positions the country as a key player in the global automotive industry in 2024 and beyond.