Future of Automotive Industry in India
The existing players in the automotive industry need to equip themselves for the evolving contours as India races ahead as the world’s 3rd largest passenger vehicle market and the upcoming trends at the global level can cause disruptions in the sector. India is billed to rise up as the world’s third-largest market for passenger vehicle by the year 2021 and things are already swinging in its direction. 7 years was the period which took India to add an extra million to the annual production of three million vehicles. But the next milestone of five million is easily expected to be attained in a mere time frame of less than five years. Breaching the mark will rely on the consistency of the present pace of economic development which has a projected annual GDP growth rate of around 7 percent well into 2020. Other factors that may influence are maintaining the buoyancy of the rapid urbanization, growing class of consumers with friendly regulations and policies. So, let’s have a perspective on the currents trends sculpting the future of the Indian market.
Encouraging macroeconomic and demographic currents
Plenty of economic trends aid in the prospective growth and contribution of the automotive sector from the existing 7 percentage to 12 percentage between 2016 – 2026 in overall GDP of India. The hectic pace of urbanization can lead to a colossal 500 million people living in the cities by 2030, mostly accelerated by the internal migrants from the rural areas. With more and more people joining the workforce and in particular with more youth and women entering the market, the demand for mobility is set to rise multi-fold. An interesting scenario would be a whopping number of them making a direct entry into the four wheeler segment completely skipping the two wheelers. Delhi is expected and keenly watched by experts to reach the GDP levels in purchasing power akin to Russia by the year 2025. And the city is certain to become a candy for the car manufacturers to target exclusively.
Government Support to the Industry
According to the automotive mission plan 2026, the industry and government have set an ambitious target of tripling the revenues from the automobile industry. It is also estimated that the industry would generate 60 million additional jobs, directly and indirectly which could have a positive bearing on the manufacturing competitiveness and minimized emissions. The government on its part, to smartly tackle the effect of emissions could elevate the local standards on par with the developed world levels making a tactical jump from BS-4 to BS-6 emissions by the year 2020. India has also cleverly implemented the Corporate Average Fuel Efficiency norms, where the vehicle producers have to enhance their fuel efficiency by 10 percent in the period between 2017 and 2021 and this is set to be escalated further by 30 percent or more from 2022 in keeping with the burgeoning environmental concerns felt across the country.
India as a manufacturing hub
With the World Economic Forum ranking India at the 30th position in the global manufacturing index which is an assessment of the manufacturing capabilities of more than 100 nations, things are looking bright. Added to it, the government’s “Make in India” policy has enabled the making of huge strides at the global level for India and in the past few years the country has improved in the ease of doing business as measured in nine out of ten parameters. Though there is much headway to be made and quite a long road ahead before India emerges as a leader in the manufacturing sector, companies in the automobile sphere are utilizing the opportunity to the core to leverage the nation as the best hub for high-quality products produced at minimal costs. Having already secured its place in the mini cars category, India is making giant inroads in the category of compact sedans and SUVs