Automotive Industry’s Contribution to India’s Economic Growth
- It aids in the expansion of the MSME sector. For instance, 35% of value addition to an automobile is contributed by MSMEs. The automotive aftermarket also offers hundreds of MSME’s involved in the auto value chain economic prospects.
- The manufacturing industry gets a boost. The sector makes up about 35% of the manufacturing GDP and 6.4% of the overall GDP.
- It is non-doubtful a source of employment. More than 8 million jobs are supported directly by it, and there could be up to 30 million more down the value chain.
- It boosts investment in the economy. For instance, it has drawn $35 billion over the past ten years.
- It is a major source of foreign money. For instance, it contributes $27 billion in export earnings or around 8% of India’s overall merchandise exports.
Automobile Industry in India
In India, the automobile industry is a vital force behind both macroeconomic expansion and technological advancement. Two-wheelers, trucks, cars, buses, and three-wheelers are all part of the Indian automobile sector, which is essential to the expansion of the Indian economy. Since the 1950s, when India’s yearly vehicle output was capped at 40.000 units, the country’s automotive industry has advanced significantly. The three top manufacturers—Hindustan Motors, Premier Automobiles, and Standard Motors—were limited to early production. Without noting the Pioneer Mr J.R.D. Tata’s involvement in establishing the Tata group with high standard Engineering Research Center (ERC) in 1965 to assist technological advancement, the development story of the Indian automobile industry cannot be considered complete. By developing indigenous technological expertise for trucks in partnership with Mercedes-Benz, Maruti debuted the 800 in 1983, changing the dynamics of the Indian passenger car market. After liberalization, several global corporations began producing in India by 1990. Market development and rising car demand resulted in wholesome industry expansion.
In FY22, 22.93 million automobiles were produced annually in India. Due to India’s large proportion of young people and expanding middle class, the two-wheeler category dominates the industry in terms of volume. Additionally, the expanding interest of businesses in investigating the rural markets contributed to the sector’s expansion. According to statistics from 2021, India has the fourth-largest automobile industry worldwide. India became the fourth-largest nation in the world by automobile industry worth in 2022. The auto sector in India is currently valued at more than $100 billion, produces 8% of the total exports, and accounts for 2.3% of the country’s GDP.