Big contributor to GDP, job creation and exports, auto sector is shining example of India’s progress
India’s automotive sector has earned global recognition, becoming a vital player in international markets. Exports have surged, with the number of vehicles exported growing by an impressive 35.9% from 4.13 million in 2020-21 to 5.62 million in 2021-22.
The automobile and auto components manufacturing industry stands as a cornerstone of India’s economic aspirations, playing a critical role in achieving the goals of Mission 2047 and the $5 trillion economy target. With its robust contribution to GDP, job creation, exports, and technological advancements, the sector is driving India’s economic transformation.
A Key Contributor to GDP and Employment
The automotive industry has grown to account for 7.1% of India’s GDP, a remarkable rise from 2.77% in 1992-93. This growth underscores the sector’s pivotal role in shaping the country’s economy. Beyond economic metrics, the industry is also a powerhouse for employment, generating direct and indirect jobs for over 19 million people. This substantial workforce participation reflects the sector’s ability to address unemployment challenges while nurturing a skilled labor force.
Global Competitiveness and Export Growth
India’s automotive sector has earned global recognition, becoming a vital player in international markets. Exports have surged, with the number of vehicles exported growing by an impressive 35.9% from 4.13 million in 2020-21 to 5.62 million in 2021-22. This growth highlights India’s growing stature as a global automotive hub.
The sector’s appeal is further validated by its ability to attract Foreign Direct Investment (FDI). From April 2000 to September 2022, the industry received $33.77 billion in FDI, reflecting global confidence in its growth potential and resilience. These investments not only bolster manufacturing capacities but also bring in advanced technologies and global best practices.
Electric Vehicles (EVs) and Sustainability
As the world transitions towards sustainable energy solutions, the Indian automotive industry is taking significant strides in promoting electric mobility. The National Electric Mobility Mission Plan (NEMMP) 2020 has laid the foundation for widespread EV adoption, aiming to enhance fuel security and offer affordable transportation options.
Complementing this mission is the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme, which incentivizes the production and adoption of EVs. The second phase of this scheme emphasizes the electrification of public and shared transportation, making green mobility accessible to the masses. Furthermore, the government’s focus on developing EV charging infrastructure, with guidelines for stations every 25 km, ensures that the transition to electric vehicles is both seamless and sustainable.
Empowering MSMEs in the Auto Components Sector
The backbone of India’s automotive ecosystem lies in the Micro, Small, and Medium Enterprises (MSMEs) that form the majority of the auto components industry. Employing over 32 million people, the sector serves as a critical job creator, particularly in rural and semi-urban areas.
Government initiatives such as the Production Linked Incentive (PLI) scheme have been instrumental in empowering MSMEs. With financial incentives to enhance production capabilities, these enterprises are better equipped to scale operations, adopt advanced technologies, and contribute to domestic manufacturing growth.
Embracing Advanced Technologies for Global Competitiveness
In an era defined by Industry 4.0, the adoption of advanced technologies is essential for maintaining a competitive edge. Indian manufacturers, supported by organizations like the Automotive Research Association of India (ARAI), are embracing technologies such as Intelligent Transport Systems (ITS). These innovations not only optimize existing infrastructure but also position India as a leader in automotive research and development.
Policy and Infrastructure Support: Catalysts for Growth
The government’s focus on policy and infrastructure development has provided the automotive industry with a strong foundation for growth. Initiatives like the PLI scheme for automobiles and auto components, with an outlay of ₹26,000 crore, aim to boost the production of electric and hydrogen fuel vehicles while generating approximately 750,000 direct jobs.
Additionally, the establishment of robust charging infrastructure and incentives for green vehicles underscores the government’s commitment to sustainability. These measures ensure that the sector remains future-ready and aligned with global environmental standards.
Driving Towards Economic Milestones
The automobile and auto components industry is more than just a manufacturing powerhouse—it is a driver of economic growth, a generator of employment, and a beacon of sustainability. As India strives to achieve its Mission 2047 goals and establish itself as a $5 trillion economy, this industry’s contributions will be indispensable.
Through strategic policies, technological advancements, and a commitment to sustainability, the sector is well-positioned to lead India into a new era of economic prosperity. With continued support and innovation, the automotive industry is set to remain at the heart of India’s growth story, driving the nation forward on its journey to becoming a global economic powerhouse.
