Challenges of the Automobile Industry in India
- Companies must adapt to shifting social preferences in a regulatory environment by meeting government and technological needs.
- The tax system, particularly the difference between excise and customs taxes on raw materials and finished automobiles the lack of resources, such as power, skilled labour, and technology, that are available at a fair price. ​
- Transitioning to an electric drive-train is not so simple.
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. ​