Automotive industry in India

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Chennai is home to around 35–40% of India's total automobile industry.
A Tata Motors next generation concept car 2015 Geneva Motor Show

The automotive industry in India is one of the largest in the world with an annual production of 23.96 million vehicles in FY (fiscal year) 2015–16, following a growth of 2.57 per cent over the last year. The automobile industry accounts for 7.1 per cent of the country's gross domestic product (GDP). The Two Wheelers segment, with 81 per cent market share, is the leader of the Indian Automobile market, owing to a growing middle class and a young population. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector, the overall Passenger Vehicle (PV) segment has 13 per cent market share.

India is also a prominent auto exporter and has strong export growth expectations for the near future; in FY 2014–15, automobile exports grew by 15 per cent over the last year. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in the world by 2020.[1]

Market Size[edit]

Auto Expo 2014, Noida

The industry produced a total 14.25 million vehicles including PVs, commercial vehicles (CVs), three wheelers (3W) and 2W in April–October 2015, as against 13.83 in April–October 2014, registering a marginal growth of 3.07 per cent, year-to-year.

The sales of PVs grew by 8.51 per cent in April–October 2015 over the same period in the previous year. The overall CVs segment registered a growth of 8.02 per cent in April–October 2015 as compared to same period last year. Medium and Heavy Commercial Vehicles (M&HCVs) registered very strong growth of 32.3 per cent while sales of Light Commercial Vehicles (LCVs) declined by 5.24 per cent during April–October 2015, year-to-year.

In April–October 2015, overall automobile exports grew by 5.78 per cent. PVs, CVs, 3Ws and 2Ws registered growth of 6.34 per cent, 17.95 per cent, 18.59 per cent and 3.22 per cent, respectively, in April–October 2015 over April–October 2014.[2]

Investments[edit]

Interior of Tata ConnectNext EV concept car at 2015 Geneva Motor Show
Tata Prima T1 truck at Buddh International Circuit

In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months, the industry has attracted foreign direct investment (FDI) worth US$13.48 billion during the period April 2000 to June 2015, according to data released by Department of Industrial Policy and Promotion (DIPP).

Some of the major investments and developments in the automobile sector in India are as follows:

  • Global auto maker Ford plans to manufacture in India two families of engines by 2017, a 2.2 litre diesel engine code-named Panther, and a 1.2 litre petrol engine code-named Dragon, which are expected to power 270,000 Ford vehicles globally.
  • The world's largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc and Toyoda Gosei Co are setting up plants and increasing capacity in India.
  • General Motors plans to invest US$1 billion in India by 2020, mainly to increase the capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.
  • US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$525 million) in Maharashtra, to manufacture Jeep Grand Cherokee model.
  • Mercedes Benz has decided to manufacture the GLA entry SUV in India. The company has doubled its India assembly capacity to 20,000 units per annum.
  • Germany-based luxury car maker Bayerische Motoren Werke AG's (BMW) local unit has announced to procure components from seven India-based auto parts makers.
  • Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares in France-based Peugeot Motorcycles (PMTC).[2]

Government Initiatives[edit]

Isuzu's newly inaugurated manufacturing plant in 2016 at Sri City, Andhra Pradesh, India

The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route.

Some of the major initiatives taken by the Government of India are:

  • The Government of India aims to make automobile manufacturing the main driver of "Make in India" initiative, as it expects the passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.
  • In the Union budget of 2015-16, the Government has announced plans to provide credit of Rs 850,000 crore (US$127.5 billion) to farmers, which is expected to boost sales in the tractors segment.
  • The government plans to promote eco-friendly cars in the country—i.e. CNG-based vehicles, hybrid vehicles, and electric vehicles—and also to make mandatory 5 per cent ethanol blending in petrol.
  • The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020, to encourage the progressive introduction of reliable, affordable, and efficient electric and hybrid vehicles into the country.
  • The Automobile Mission Plan (AMP) for the period 2006–2016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector.[3]

History[edit]

A pre-Independence car showroom in Secunderabad
Indian Royalty were one of the largest buyers of luxury cars during pre-Independence British India
Kolkata street traffic in 1945

In 1897, the first car ran on an Indian road. Through the 1930s, cars were imports only, and in small numbers.

An embryonic automotive industry emerged in India in the 1940s. Hindustan Motors was launched in 1942, long-time competitor Premier in 1944, building Chrysler, Dodge, and Fiat products respectively.[4] Mahindra & Mahindra was established by two brothers in 1945, and began assembly of Jeep CJ-3A utility vehicles. Following independence in 1947, the Government of India and the private sector launched efforts to create an automotive-component manufacturing industry to supply to the automobile industry; in 1953, an import substitution programme was launched, and the import of fully built-up cars began to be restricted.[4]

1947-1970[edit]

The 1949 Hindustan 10 built by Hindustan Motors under license from Morris Motors, UK
The Hindustan Ambassador dominated India's automotive market from the 1960s until the mid-1980s and was manufactured till 2014
Fiat 1100D, built under license by Premier Automobiles later re-christened 'Premier Padmini' was the Ambassador's only true competitor

The 1952 Tariff Commission[edit]

In 1952, the government appointed the first Tariff Commission, one of whose purposes was to come out with a feasibility plan for the indigenization of the Indian automobile industry; in 1953, the commission submitted their report, which recommended categorizing existing Indian car companies according to their manufacturing infrastructure, with licensed capacity to manufacture a certain number of vehicles, with capacity increases allowable, as per demands, in the future. The Tariff Commission recommendations were implemented with new policies that would eventually exclude companies that only imported parts for assembly, as well as those with no Indian partner; in 1954, following the Tariff Commission implementation, General Motors, Ford, and Rootes Group, which had assembly-only plants in Mumbai, decided to move out of India.[5]

The Tariff commission policies, including similar restrictions that applied to other industries, came to be known as the "license raj", which proved to be the greatest undoing of the Indian automotive industry, where bureaucratic red tape ended up causing demand to outstrip supply, with month-long waiting periods for cars, scooters, and motorcycles.

Passenger Cars

Utility and Light Commercial Vehicles

Medium and Heavy Commercial Vehicles

Scooters, Mopeds and Motorcycles

The Vespa 150 Sprint

known as Bajaj Chetak, by Bajaj became the largest sold scooter in the world

1970 to 1983[edit]

However, growth was relatively slow in the 1950s and 1960s, due to nationalisation and the license raj, hampered the growth of Indian private sector.

The beginning of the 1970s saw some growth potential and most of the collaboration license agreements came to an end but with option to continue manufacturing with renewed branding. Cars were still meant for the elite and Jeeps were largely used by government organizations and some rural belts; in commercial vehicle segments some developments were made by the end of the decade to cater improved goods movements. The two-wheeler segment remained unchanged except for to increased sales in urban among middle class, but more fillip was target towards farm tractors as India was embarking on a new Green Revolution. More Russian and eastern bloc imports were done to increase the demand.

But after 1970, with restrictions on the import of vehicles set, the automotive industry started to grow; but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars still remained a major luxury item; in the 1970s, price controls were finally lifted, inserting a competitive element into the automobile market.[6] However, by the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited numbers,[7] during the eighties, a few competitors began to arrive on the scene.

The OPEC oil crisis saw increase need to installing or redesign some vehicle to fit diesel engines on medium commercial vehicle, until the early 1970s Mahindra Jeeps were on Petrol and Premier commercial vehicles had Petrol model options. The Defence sector too had most trucks on Pertol engines.

1984 to 1992[edit]

First generation Maruti 800 launched in 1984

From the end of the 1970s to the beginning of the 1980s saw no new models but the country continued with 2 decade old designs forcing government to encourage and let more manufacturers into fray.

In 1984, the then Prime Minister of India, Indira Gandhi established the Ordnance Factory Medak, near Hyderabad, it started manufacturing Infantry Combat Vehicles christened as Sarath, the backbone of India's mechanised infantry. OFMK is still the only manufacturing facility of ICVs in India. To manufacture the high-power engines used in ICVs and main battle tanks, Engine Factory Avadi, near Chennai was set in 1987; in 1986, to promote the auto industry, the government established the Delhi Auto Expo. The 1986 Expo was a showcase for how the Indian automotive industry was absorbing new technologies, promoting indigenous research and development, and adapting these technologies for the rugged conditions of India, the nine-day show was attended by then Prime Minister Rajiv Gandhi.

Post-1992 liberalisation[edit]

Tata Indica, launched in 1997
Mahindra Scorpio was launched in 2001
Maruti Suzuki Swift Dzire and its hatchback version are the largest selling cars in recent years in India

Eventually multinational automakers, such as, Suzuki and Toyota of Japan and Hyundai of South Korea, were allowed to invest in the Indian market, furthering the establishment of an automotive industry in India. Maruti Suzuki was the first, and the most successful of these new entries, and in part the result of government policies to promote the automotive industry beginning in the 1980s.[7] As India began to liberalise its automobile market in 1991, a number of foreign firms also initiated joint ventures with existing Indian companies, the variety of options available to the consumer began to multiply in the nineties, whereas before there had usually only been one option in each price class. By 2000, there were 12 large automotive companies in the Indian market, most of them offshoots of global companies.[8]

Slow export growth[edit]

Exports were slow to grow. Sales of small numbers of vehicles to tertiary markets and neighbouring countries began early, and in 1987 Maruti Suzuki shipped 480 cars to Europe (Hungary), after some growth in the mid-nineties, exports once again began to drop as the outmoded platforms provided to Indian manufacturers by multinationals were not competitive.[9] This was not to last, and today India manufactures low-priced cars for markets across the globe, as of 18 March 2013, global brands such as Proton Holdings, PSA Group, Kia, Mazda, Chrysler, Dodge and Geely Holding Group were shelving plans for India due to the competitiveness of the market, as well as the global economic crisis.[10]

Emission norms[edit]

In 2000, in line with international standards to reduce vehicular pollution, the central government unveiled standards titled "India 2000", with later, upgraded guidelines to be known as Bharat Stage emission standards. These standards are quite similar to the stringent European emission standards and have been implemented in a phased manner. Bharat Stage IV (BS-IV), the most stringent so far, was implemented first, in April 2010, in 13 cities—Delhi (NCR), Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra—and then, as of April 2017, the rest of the nation.

Local manufacture encouraged[edit]

India levies an import tax of 125% on electric cars, while the import tax on components such as gearboxes, airbags, drive axles, is 10%. Therefore, the taxes encourage cars to be assembled in India rather than be imported as completely built units.[11]

Manufacturing facilities[edit]

The majority of India's car manufacturing industry is evenly divided into three "clusters", around Chennai is the southernmost and largest, with a 35% revenue share, accounting for 60% of the country's automotive exports, and home of the operations of Heavy Vehicles Factory, Engine Factory Avadi, Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, Mini, and Datsun.[12][13]

Near Mumbai, Maharashtra, along the Chakan corridor near Pune, is the western cluster, with a 33% share of the market. Audi, Volkswagen, and Skoda are located in Aurangabad. Mahindra and Mahindra has an SUV and engine assembly plant at Nashik. General Motors, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat, and Force Motors have assembly plants in the area.[14][15]

The northern cluster is around the National Capital Region, and contributes 32%. Gurgaon and Manesar, in Haryana, are where the country's largest car manufacturer, Maruti Suzuki, is based.

An emerging cluster is the state of Gujarat, with a manufacturing facility of General Motors in Halol, and a facility for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki, and Peugeot-Citroen plants are also planned for Gujarat.[16]

Kolkata with Hindustan Motors (inactive), Noida with Honda, and Bengaluru with Toyota are other automotive manufacturing regions around the country.[17][18][19]

Andhra Pradesh[edit]

Commercial and passenger vehicles
Two wheelers
Off-highway vehicles
Reva electric car sold as G-Wiz in UK

Gujarat[edit]

Passenger vehicles
Commercial vehicles

Haryana[edit]

Two wheelers
Passenger vehicles

Himachal Pradesh[edit]

Two wheelers
Passenger vehicles
Commercial vehicles

Jharkhand[edit]

Commercial vehicles

Karnataka[edit]

Two wheelers
Passenger vehicles
Commercial vehicles
A TVS Rickshaw in Chennai: India is one of the world's largest manufacturers of three-wheel vehicles.
Bajaj Pulsar range of Motorcycles
Hero Honda CBZ one of the popular models
A Volvo bus
State Transport Corporation are the largest buyers for Buses in India
India is the worlds largest Tractor manufacturer by volume
Mahindra 3616 Four Wheel Drive sold in USA
L&T 752 Road Roller 2015

Kerala[edit]

Commercial vehicles

Madhya Pradesh[edit]

Two wheelers
Commercial vehicles

Maharashtra[edit]

Two wheelers
Passenger vehicles
Commercial vehicles

Punjab[edit]

Commercial vehicles

Rajasthan[edit]

Two Wheelers

Honda Motorcycle & Scooter India – Tapukara[25]

Passenger vehicles
Commercial vehicles

Tamil Nadu[edit]

Two wheelers
Passenger vehicles
Commercial vehicles
T-90S Bhishma Tank's engine manufactured by Engine Factory Avadi, Chennai

Telangana[edit]

Defence

Uttar Pradesh[edit]

Two wheelers
Passenger vehicles
Commercial vehicles

Uttarakhand[edit]

Commercial vehicles
Two wheelers

West Bengal[edit]

Passenger vehicles

Exports[edit]

Mahindra Scorpio in service with Italy's CNSAS.

India's automobile exports have grown consistently and reached $4.5 billion in 2009, with the United Kingdom being India's largest export market, followed by Italy, Germany, Netherlands, and South Africa.[80]

According to the New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai, Nissan, Toyota, Volkswagen, and Maruti Suzuki.[81]

In 2008, South Korean multinational Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011.[82] Similarly, US automobile company, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011.[83]

In September 2009, Ford Motors announced its plans to set up a plant in India with an annual capacity of 250,000 cars, for US$500 million, the cars will be manufactured both for the Indian market and for export.[84] The company said that the plant was a part of its plan to make India the hub for its global production business.[85] Fiat Motors announced that it would source more than US$1 billion worth auto components from India.[86]

A Tata Safari on display in Poznań, Poland.

In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m).[87]

In July 2010, The Economic Times reported that PSA Peugeot Citroën was planning to re-enter the Indian market and open a production plant in Andhra Pradesh that would have an annual capacity of 100,000 vehicles, investing € 700M in the operation.[88] PSA's intention to utilise this production facility for export purposes however remains unclear as of December 2010.

The Maruti Ertiga, a model exported by Maruti Suzuki, India.

In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from Maruti Exports' shipments to Suzuki's other markets, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is preparing to sell electric cars in Europe in 2010. The firm is planning to sell an electric version of its affordable car the Tata Nano in Europe and in the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project.[89] While the possibilities for the Indian automobile industry are impressive, there are challenges that could thwart future growth, since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.[89]

Top 10 export destinations[edit]

India exported $14.5 billion worth of automobiles in 2014. The 10 countries below imported 47.8% of that total.[90]

Rank Country Value (US$) Share
1 United States 1.2 billion 8.4%
2 Mexico $1 billion 6.9%
3 South Africa $888.8 million 6.1%
4 United Kingdom $637.4 million 4.4%
5 Sri Lanka $596.9 million 4.1%
6 Bangladesh $592.1 million 4.1%
7 Turkey $580.4 million 4%
8 Nigeria $546.8 million 3.8%
9 United Arab Emirates $433.6 million 3%
10 Colombia $428.9 million 3%

Passenger vehicles in India[edit]

This list is of cars that are officially available and serviced in India. While other cars can be imported to the country at a steep 105% import duty, car-makers such as Alfa Romeo,[91] McLaren,[92] Pagani,[93] Cadillac,[94] Chrysler,[95] SSC,[96] Lincoln,[97] Zenvo,[98] SEAT,[99] Smart,[100] Daihatsu,[101] Infiniti,[102] Acura,[103] Saab,[104] Spyker,[105] Lotus,[106] Ariel,[107] Caterham,[108] Peugeot-Citroën,[109] Mazda,[110] Kia,[111] GAZ,[112] and Proton[113] are in various stages of official introduction into the Indian automobile industry.

Indian automotive companies[edit]

Models currently manufactured by Indian companies[edit]

Maruti Swift in India. Maruti Suzuki is a subsidiary of Suzuki Motor Corporation of Japan
Mahindra XUV500, one of India's best selling indigenously developed SUV

Defunct Indian automotive companies[edit]

Foreign automotive companies in India[edit]

Hyundai, Suzuki, BMW, Volkswagen, Audi, Mercedes Benz, Ford, Fiat, Honda, Chevrolet (of General Motors), Toyota, Lamborghini, Jaguar, and Skoda are the foreign automotive companies that manufacture and market their products in India.

Vehicles currently manufactured or assembled in India[edit]

Manufactured only in Chennai, India, the i10 is one of Hyundai's best selling globally exported cars.

Opel was present in India until 2006. As of 2013, Opel only provides spare parts and vehicle servicing to existing Opel vehicle owners.

Vehicles currently imported into India[edit]

Suzuki Kizashi. Kizashis are sold by Maruti in the Indian market
Honda civic MugenRR
Mitsubishi Lancer Evolution X

Commercial vehicle manufacturers in India[edit]

Indian brands[edit]

Joint-venture (JV) brands[edit]

Foreign-owned brands[edit]

Electric vehicle and Hybrid vehicle (xEV) industry[edit]

Further information: Electric vehicle industry in India

During April 2012, the Indian government planned to unveil the road map for the development of domestic electric and hybrid vehicles (xEV) in the country.[193] A discussion between the various stakeholders, including Government, industry, and academia, was expected to take place during 23–24 February,[193] the final contours of the policy would have been formed after this set of discussions. Ministries such as Petroleum, Finance, Road Transport, and Power are involved in developing a broad framework for the sector. Along with these ministries, auto industry executives, such as Anand Mahindra (Vice Chairman and Managing Director, Mahindra & Mahindra) and Vikram Kirloskar (Vice-Chairman, Toyota Kirloskar), were involved in this task.[193] The Government has also proposed to set up a Rs 740 crore research and development fund for the sector in the 12th five-year plan during 2012-17,[193] the idea is to reduce the high cost of key imported components such as the battery and electric motor, and to develop such capabilities locally.

Electric car manufacturers in India[edit]

Defunct motor vehicle manufacturers of India[edit]

  • Automobile Products of India or API - founded in 1949 at Bombay (now Mumbai), by the British company Rootes Group,[199] and later bought over by M. A. Chidambaram of the MAC Group from Madras (now Chennai).[199] The company manufactured Lambretta scooters, API Three Wheelers under licence from Innocenti of Italy and Automobile ancillaries, notably Clutch and Braking systems. API's registered offices were earlier in Mumbai, later shifted to Chennai, in Tamil Nadu, the manufacturing facilities were located in Mumbai and Aurangabad in Maharashtra and in Ambattur, Chennai.[200] The company has not been operational since 2002.
  • Escorts Yamaha - in 1984 Escorts formed a joint venture with Yamaha to manufacture motorcycles. In 2008 became India Yamaha Motor.
  • Hero Motors is a former moped and scooter manufacturer based in Delhi, India. It is a part of multinational company Hero Group, which also currently owns Hero Motocorp (formerly Hero Honda) and Hero Cycles, among others. Hero Motors was started in the 1960s to manufacture 50 cc two-stroke mopeds but gradually diversified into making larger mopeds, mokicks and scooters in the 1980s and the 1990s. Noteworthy collaborators and technical partners were Puch of Austria and Malaguti of Italy. Due to tightening emission regulations and poor sales, Hero motors have discontinued the manufacture of all gasoline powered vehicles and transformed itself into an electric two-wheeler and auto parts manufacturer.
  • Ideal Jawa - motorcycle company based in Mysore, sold licensed Jawa and ČZ motorcycles beginning in 1960 under the brand name Jawa and later Yezdi.
  • Kinetic Honda - a joint venture between Kinetic Engineering Limited, India and Honda Motor Company, Japan. The JV operated during 1984 - 1998, manufacturing 2-stroke scooters in India; in 1998, the joint venture was terminated after which Kinetic Engineering continued to sell the models under the brand name Kinetic until 2008[201] when the interests were sold to Mahindra.
  • Mopeds India Limited - produces the Suvega range of Mopeds under technical collaboration with Motobécane of France.
  • Standard - produced by Standard Motor Products in Madras from 1949 to 1988. Indian Standards were variations of vehicles made in the U.K. by Standard-Triumph. Standard Motor Products of India Ltd. (SMPI) was incorporated in 1948,[202] and their first product was the Vanguard, which began to be assembled in 1949. The company was dissolved in 2006 and the old plant torn down.

See also[edit]

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