The automobile industryin India is one of the largest across the globe, attributing to 7.1 per cent ofthe Gross Domestic Product (GDP) within the country. The Two Wheelers segmentwith an astounding 80 per cent hold on market share leads the Indian Automobilemarket. This is seen as the result of a growing middle class and an everexpanding population of youth. Additionally, an increase in the interest ofcompanies in exploring the rural markets has further aided the expansion of theabove mentioned sector.
The overall Passenger Vehicle section has 14 per centmarket share.India also featuresprominently as an auto exporter and has strong export growth expectations inthe years to follow. In April-March 2017 exports of passenger vehicles andCommercial Vehicles saw a growth of 16.
20 per cent and 4.99 per centrespectively. Additionally, several initiatives by the Government of India and leadingautomobile players in the Indian market are further expected to grab attentionby putting the country on the map by making India a leader in the two-wheelerand Four Wheeler market by the year 2020.There has been aprogressive and steady growth in the production of passenger vehicles,commercial vehicles, three wheelers and two wheelers. The figures have grown from 5.41 per cent,being 24,016,599 vehicles in the year 2016 to being 25,316,044 vehicles in theyear 2017.The sales of passenger vehicles, commercial vehicles and two wheelerssaw a growth, specifically 9.
23 per cent, 4.16 per cent and 6.89 per centrespectively. This surge was seen between 2-16-2017 in the months of April andMarch.
Expansions were alsoseen in the electric sales section. India’s electric vehicle sales surged by37.5 per cent to 22,000 units between 2016 and 2017. The country’s Governmenthas developed the vision to see six million electric hybrid vehicles in Indiawithin the year 2020 and owing to this factor we can expect to see andincreased demand of these vehicles mainly because of lowered energy storagecosts. Most recent developmentshave seen numerous auto manufacturers making heavy investments in multiplesegments of the industry in a bid to keep up with the ever growing demand.
Thiswas especially seen in the last few months. In accordance with data receivedand released by the Department of Industrial Policy and Promotion (DIPP) in thetime spanning from April 2000 to June 2017, the industry has attracted ForeignDirect Investment (FDI), from numerous bodies, worth US$ 17.40 billion. Listed below are someof the major investments and developments in the automobile sector in India: A subsidiary of Jindal Group, JSW energy, signed a Memorandum of Understanding (MoU) to set up an electric vehicle-manufacturing company at a cost of Rs 4,000 crore (US$ 613 million) which will be capable of producing 2,00,000 electric vehicles annually.
This memorandum was signed with the Government of the state of Gujarat. Tata Motors invested Rs 4,000 crore (US$ 612 million) in the year 2017. The major portion of this investment was utilised by passenger vehicles i.e. Rs 2,500 crores (US$ 375 million) and the portion not accounted for by the above mentioned i.e.
, Rs 1,500 crore ($225 million) will be utilised as and when required by the company over the years to come. In the summer of2017, Tesla, known famously for their electric car manufacturing was to introduce products in India. The government of Andhra Pradesh is also set to make giant investments that will result in setting up a factory in Penukonda in Anantapur district. They are looking to sign a memorandum of understanding (MoU) with Kia Motors.
The company will invest US$ 2 billion on this plant with the manufacturing capacity of 3,00,000 vehicles per annum. Various automobile manufacturers are also vastly exploring the agenda of introducing driverless and self-driven cars in the country. These include globally renowned companies such as Audi and more local/ national companies as Maruti Suzuki and Mahindra & Mahindra. With an impending merge with TVS Motors in Hosur, Tamil Nadu, BMW is making a bold move with plans to produce a local version of motorcycles having capacity below 500CCand also the G310R.
Hero MotoCorp is making bold moves to make an impact and leave a mark in the Indian Electric Vehicle industry. They have done so by going after the electric vehicle programme and making an investment of US$ 30.75 million (205 crores).
The investment has been made to acquire a 25- 30 per cent stake at Ather Energy Private Limited, a Bengaluru based start-up that is technologically oriented. Like most of the major cities in India, Chennai has also been targeted for related changes. Keen company, Ford Motor Co. intends to invest 195 million US$ (Rs 1300 crore) to develop a global technology and business centre. The aim is to design it as a product development hub while also providing mobility solutions and business services for India and other markets at large. An avid encourager offoreign investment, the Government of India allows one hundred per cent of itin the automobile industry as well, that too by the Foreign Direct Investmentunder the automatic route. Some of the majorinitiatives taken by the Government of India, for betterment of the situationwithin the country, are as follows: Fossil fuel imports are at an all-time high. The government needs to look for alternative fuels that will also be cheaper, like methanol for instance.
Additionally, the government plans on introducing, for the purpose of road and water transportation, biofuel vehicles. The duty on chassis for ambulances were dropped from 24 per cent to 12.5 percent.
The government also increased their support to the vehicle industry by upping custom duty on Completely Built Unit of commercial vehicles. This was a steep jump from a mere 10 per cent to a massive 40 per cent. Talks have been in the line about the introduction of a new Green Urban Transport Scheme with Central Government assistance which is pegged at an assistance of Rs. 25,000 crore. This scheme will aim at boosting the growth of urban transport along low carbon path for substantial reduction in pollution and providing a framework at the tri level of Nation, state and city for funding urban mobility projects.
This is to be achieved with minimum recourse to budgetary support by encouraging innovative financing of projects. As brought to light in the Auto Mission Plan (AMP) 2016-26, the Government is expectant that passenger vehicles will triple and become 9.4 million units by 2026. In light of this, they aim to make the main initiative of ‘Make in India’ the automobiles manufacturing sector. For Manufacturing of Electric and Hybrid Vehicles in India and faster adoption of the same, the Government has developed an ingenious scheme. This falls under the National Electric Mobility Mission 2020. The National Electric Mobility Mission 2020 seeks to further progress three main agendas: (i) reliable hybrid electric and hybrid vehicles (ii) affordable electric and hybrid vehicles and (iii) efficient electric and hybrid vehicles.
Multiple factors assistthe automobile industry. These include availability of skilled labour at lowcost, robust R&D centres and low cost steel production. Furthermore, otherprovisions are encompassed in this system such as innumerable opportunities forinvestment, various forms of employment, both direct and indirect and also toboth skilled and unskilled labour.