Automobile Industry of India


India has a huge automobile industry. The country ranks 4th in Asia and 9th in the world as the world’s largest automobile Industry. India has an annual production of approximately about 2.3 million units.

Presently, India is the world’s largest tractor manufacturer, the second-largest manufacturer of two-wheelers, and the fifth-largest manufacturer of commercial vehicles.

The automobile industry in India gained momentum after the liberalization in 1991. The industry has continued to grow consistently and is increasingly becoming competent in the global market. Recently, India has seen an upsurge in the automobile industry thanks to its relaxed restriction on the sector’s investment policies. India’s overall economic growth has also played a significant role in attracting foreign investors in India to invest in the country’s automobile sector.

Automobile Industry The automobile sector in India has displayed great advances in utilizing new technologies and being flexible in the wake of the changing business scenario.

The central government of India and its state governments have taken several measures to draw investments in the sector and further accelerate the country’s growth. The government has liberalized the norms for foreign investment in the industry. Presently the government permits 100% direct foreign investment in the industry.

The government has also undertaken several policy measures and incentives to boost India’s automobile sector. The most prominent policy is Auto Policy, which was drawn in 2000. This policy aims to establish a globally competitive automobile industry in India and contribute to the Indian economy.

The important objectives of the Auto Policy are:

1. Making India a global source of auto components

2. Aiding the development of vehicles that alternative energy sources can drive

3. Developing domestic safety methods that are on par with international standards

4. Steering India’s software industry into the automobile technology

5. Making India an international hub for manufacturing small and cheap passenger cars

6. Being the global center for manufacturing two-wheelers

7. Ensuring a balanced transition to open trade at a minimal risk

Thus, India’s ambitious Auto Policy aims to make India grow in the sector and attract huge investment.

The Department of Heavy Industry, which falls under the Ministry of Heavy Industries and Public Enterprises, is the leading agency responsible for promoting India’s growth and development.

The department assists the industry’s growth through policy initiatives, providing technological collaboration, upgrading, and R&D facilities to automobile manufacturers.

The growth of the Indian middle class and their increased purchasing power supported by strong macroeconomic fundamentals have been instrumental in attracting major auto manufacturers in India. Several global players, including leading automobile manufacturers Suzuki and Honda, have invested heavily in India and have managed to tap the Indian market.

All these factors and the government’s initiatives indicate that the Indian automobile industry has emerged as a new sector with unlimited growth potential and has promised valuable investment returns. The automobile sector has been meeting the domestic market requirements but penetrating deep into the international market.