The automobile industry encompasses design, development, manufacturing, marketing and selling of motor vehicles. The industry space is dominated by Two Wheelers that account for 81% of the total domestic market share, followed by Passenger Vehicles which account for 13% and Commercial vehicles as well as Three wheelers which together make up 6% of the remaining share. The industry contributes 7.1% to India’s GDP and 22% to India’s manufacturing GDP. It provides employment to 30 million people in the country.
India is the largest manufacturer of two-wheelers, three-wheelers and tractors in the world. India is the fifth largest vehicle manufacturer overall.
The sale of Passenger Vehicles grew by 7.89 % in FY2018 over the same period last year. Within the Passenger Vehicles, Passenger Cars, Utility Vehicle and Vans grew by 3.33 %, 20.97 % and 5.78 % respectively in FY2018 over the same period last year. The overall Commercial Vehicles segment grew by 19.94 % in FY2018 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) grew by 12.48 % and Light Commercial Vehicles grew by 25.42 % in FY2018, over the same period last year. Three Wheelers sales grew by 24.19 % in FY2018 over the same period last year. Within the Three Wheelers, Passenger Carrier & Goods Carrier sales registered a growth of 28.65 % and 7.83 %, respectively in FY2018 over FY2017. Two Wheelers sales registered a growth at 14.80 % in FY2018 over FY2017. Within the Two Wheelers segment, Scooters and Motorcycles grew by 19.90 % and 13.69 % respectively, while Mopeds declined by (-) 3.48 % in FY2018 over FY2017.
The industry registered a CAGR of 5.32% during 2013-14 to 2017-18. The highest growth was seen in two wheeler vehicles, which registered a CAGR of 6.19% during this period, followed by Commercial vehicles, Passenger vehicles and Three wheeler vehicles which recorded CAGRs of 4.68%, 4.62% and 1.51% respectively.
Foreign Direct Investments
The Indian government encourages foreign investment in the automobile sector and allows 100% FDI under the automatic route. It is a fully delicensed industry and free imports of automotive components are allowed. Moreover, the government has not laid down any minimum investment criteria for the automobile industry.
Rising disposable income, growing urbanization, expanding rural market and government initiatives like Smart Cities, promoting the country as the Research & Development (R&D) centre by setting up of National Automotive Testing and R&D Infrastructure Project (NATRiP), and Automotive Mission Plan 2016-26 are dominant factors that will propel the Auto industry in India.
Automotive products are regulated through EU laws for vehicle type-approval. To improve the level playing field, trust of consumers and reduce administrative burden, all policy proposals are subject to competitiveness proofing.
The EU Regulation requires immediate and ongoing action from automobile manufacturers and suppliers. Under REACH, substances manufactured or imported on their own or in mixtures, as well as substances intended to be released from articles, need to be registered according to the REACH timeline once a certain yearly tonnage is exceeded. Additionally, Substances of Very High Concern (SVHCs) may require authorization or may be restricted. SVHCs listed on the Candidate List need to be identified in articles and communicated throughout the supply chain and to the consumer if certain criteria are met. Continued REACH compliance is critical to maintain business continuity for any company doing business, or having customers or suppliers doing business, in the European Economic Area (EEA).
China “Automobile RoHS”: “Management Requirements for Vehicle Hazardous Substance and Recyclable Utilization Ratios” (“Requirements”), referred to as China’s “Automobile RoHS” program, is intended to specify that hazardous substance content and recyclability ratios for passenger cars carrying no more than 9 persons (M1 category) meet the specifications set out in two separate standards governing these issues.
New measures concerning restricted-material content and recyclability requirements for certain passenger cars came into effect January 1, 2016.
According to the regulations, Lead, mercury, hexavalent chromium, polybrominated biphenyls, polybrominated diphenyl ethers in any homogenous material of the motor vehicle or motor vehicle parts, by mass fraction, should not exceed 0.1%. Cadmium in any homogenous material of the motor vehicle or motor vehicle parts, by mass fraction, should not exceed 0.01%.
As per the Article 30 (Permissible Standards of Noises Produced by Manufactured Cars) of the Noise and Vibration Control Act, the noises emitted from manufactured motor vehicles (hereinafter referred to as “manufactured cars”) need to conform to the permissible manufactured car noise standards as determined by the Presidential Decree.
The exhaust gases from automobiles are regulated under Article 46 (kinds of exhaust gases) of Clean Air Conservation Act.
The United States entails vehicle or vehicle parts to conform to the U.S. Environmental Protection Agency (EPA) and Department of Transportation (DOT) regulations for emission (EPA) and safety (Department of Transportation) requirements.