In FY22, India manufactured 22.93 million cars annually. Due to a large proportion of young people in India's population and a rising middle class, the two-wheeler sector of the market is the largest by volume. The development of the industry was also helped by the increasing curiosity of corporations towards the rural markets.

Indian car exports are already substantial, and the country anticipates more expansion in this area shortly. India is predicted to become one of the world's leaders in the two-wheeler and four-wheeler industry by 2022, thanks to many efforts launched by the government and major car firms in the Indian market.

Market Size

With a CAGR of almost 9% between 2022 and 2027, the Indian passenger vehicle market is projected to grow from its 2021 value of US$ 32.70 billion to US$ 54.84 billion. By 2025, it is predicted that India's EV industry will be worth Rs. 50,000 crores ($7.09 billion).

The Rocky Mountain Institute (RMI) and the National Institute of Transforming Indian Economy (NITI Aayog) estimate that by 2030, the electric vehicle financing business in India will be worth Rs. 3.7 lakh crore (about US$ 50 billion). According to the India Energy Storage Alliance, the EV industry would grow at a 36% CAGR between 2018 and 2026. In addition, the market for EV batteries is predicted to expand at a CAGR of 30% over the same period.

Investments

Several automakers have been making large investments across industry subsets to stay up with surging consumer demand. Between April 2000 and March 2022, the sector received US$ 32.84 billion in FDI equity inflow or 6% of the overall FDI equity inflow.

The following are examples of recent/future investments and innovations in the Indian car industry:

• Tata Motors said in April 2022 that it would invest Rs. 24,000 crores (US$ 3.08 billion) over the next five years into its passenger car division.

• MG Motors, a subsidiary of China's SAIC Motor Corp, said in March 2022 that it would be seeking US$350-500 million in private equity funding in India for its future requirements and EV development.

• Ather Energy, a manufacturer of electric two-wheelers, and the Karnataka Electric Supply Companies (ESCOMs) signed a memorandum of understanding (MoU) in February 2022 to install one thousand rapid charging stations around the state.Tata Power and Apollo Tyres Ltd agreed into a strategic cooperation in February 2022 to install 150 public charging stations throughout India.

• HOP Electric Mobility, a subsidiary of Rays Power Infra that specializes in electric two-wheelers, plans to spend Rs. 100 crores (US$ 13.24 million) over the next two years to increase production capacity.

• It was reported in December 2021 that TVS Motor Company and BMW Motorrad would be forming cooperation to produce electric two-wheelers.

• Hyundai said in December 2021 that it will spend Rs 4,000 crores (US$530.25 million) in research and development in India to release six electric vehicles by 2028.

• Several public oil companies in India, including Indian Oil Corporation (IOC), said in November 2021 that they would deploy 22,000 EV charging stations around the country within three to five years.

• Skoda Auto stated in November 2021 that it would begin producing electric vehicles in India using local resources. However, before committing to local manufacture, the company may deliver its first electric vehicle, the Enyaq, through the CBU method.

• The parent company of Hero Cycles, Hero Motor (HMC), formed a joint venture with Yamaha, a prominent manufacturer of two-wheeled vehicles in Japan, in November 2021 to produce electric motors for e-bicycles for export.

• When Tata Motors announced an investment of Rs. 7,500 crores (about US$ 1 billion) from private equity firm TPG and Abu Dhabi's ADQ in its electric vehicle segment in October 2021, the sum was expressed as Rs. 7,500 crores.

• To realize India's EV goals, the country would need to spend Rs. 12.5 trillion (about US$ 180 billion) in car manufacturing and charging infrastructure between now and 2030.

Achievements

These are the successes of India's automobile industry:

• With the greatest tractor production, the second-largest bus production, and the third-largest heavy truck production worldwide, India has a commanding presence in the global heavy vehicles industry.

• The first electric vehicle (EV) charging station in Meghalaya was established in September 2021 in the Lapalang, Shillong, office complex of the Power Grid Corporation of India Limited (POWERGRID).

• India officially opened its NATRAX high-speed rail network in July 2021, making it the sixth biggest such network in the world.

• In 2021, the total amount invested in new electric vehicle businesses hit a record high of Rs. 3,307 crores (about $444 million).

• Ola Electric (US$ 253 million), Blusmart (US$ 25 million), Simple Energy (US$ 21 million), Revolt (US$ 20 million), and Detel (US$ 20 million) were the EV companies that raised the most money in 2021.2

• Since 2015, the following testing and research facilities have been set up around the nation thanks to NATRiP funding.

1. International Centre for Automotive Technology (ICAT), Manesar

2. National Institute for Automotive Inspection, Maintenance & Training (NIAIMT), Silchar

3. National Automotive Testing Tracks (NATRAX), Indore

4. Automotive Research Association of India (ARAI), Pune

5. Global Automotive Research Centre (GARC), Chennai

Road Ahead

The automotive industry is supported by several interdependent pillars, including an ample supply of labor, robust research and development facilities, and an abundant supply of inexpensive steel. There is a significant potential for financial investment, and people of varying expertise and experience may work directly or indirectly for the company.

By the year 2026, the revenue generated by the automobile industry in India is projected to range between Rs. 16.16 and Rs. 18.18 trillion (US$ 251.4 and US$ 282.8 billion).

After recovering from the COVID-19 outbreak in 2022-23, the automobile industry in India is anticipated to see significant growth. In the years 2022 and 2023, there is expected to be a rise in the number of sales of electric vehicles, notably two-wheelers.