Automobile production has grown at a CAGR of 4.43 percent during the period 2011-17. The Two wheeler segment witnessed the fastest growth during this period at a CAGR of 5.25 percent. This was followed by the Passenger vehicle segment, which grew at a CAGR of 3.80 percent during 2011-17.
The Automobile industry, which accounts for 7.1 percent of the country’s Gross Domestic Product (GDP)1, and nearly 27% of the country’s industrial GDP2, reported a growth of 5.41 percent with the industry producing a total 25,316,044 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in April-March 2017.
There has been a rapid rise in total production of electric and hybrid vehicle from 17,107 (2014-15) to 71,909 (2015-16) and rise in total sales from 16,513 (FY 2014-15) to 65,224 (FY 2015-16).
The Passenger Vehicles segment has registered a positive growth since 2011-12 except during 2013-14. During 2016-17, the segment recorded a 9.42 percent increase in production at 37,91,540.
The overall Commercial Vehicles segment, which recorded a strong growth in 2011-12, faltered during the period 2012-13, 2013-14 and 2014-15. However, the segment regained some momentum during 2015-16 and 2016-17.
The Three wheeler segment recorded mixed trend since 2011-12, showing a marginal decline in 2012-13 and 2013-14. During 2014-15, the segment registered increase in production, while in 2015-16 and 2016-17 the production skidded.
The Two wheeler segment has shown a steady growth in production during the period 2011-16. The segment maintained its growth momentum during 2016-17, recording a 5.83 percent increase in production at 1,99,29,485.
During April-March 2017, automobile exports declined by (-) 4.53 percent. The decline was led by exports of the Three Wheelers and Two wheelers that declined by (-) 32.77 percent and (-) 5.78 percent respectively in April-March 2017. The trend was bucked by Passenger Vehicles and Commercial Vehicles exports that registered a growth of 16.20 percent and 4.99 percent respectively in April-March 2017.
In 2015-16, automobile exports grew by 1.96 percent (exports worth USD 8.8 billion). The growth was led by Passenger Vehicles, Commercial Vehicles and Two wheelers which registered a growth of 5.10 percent, 18.61 percent and 1.03 percent respectively. While, the growth in Three Wheelers segment declined at (-) 0.78 percent during 2015-16.
Two wheelers accounted for the largest share of exports at 68.14 percent in 2015-16 followed by Passenger vehicles with a sizeable 17.92 percent share of overall exports. Three wheelers registered around 11.1 percent share in exports during 2015-16.
Exports in the auto-components sector, part of the auto exports, has been growing at a CAGR of 10.02 percent during 2010-16. The auto-component exports grew from USD 6.7 billion in 2010-11 to USD 10.8 billion in 2015-16.The USA, Germany, Turkey, UK and Italy emerged as the top export destinations.
During 2016-17, transport equipments contributed 8.33 percent to India’s exports.
Foreign Direct Investments
The Automobile industry has attracted higher foreign direct investment (FDI) due to the policy reforms directed towards ease of doing business and making India an attractive foreign investment destination.
Automobile industry has been regarded as a ‘Sunrise sector’ under Make in India for playing a prominent role as an employment generator, GDP contributor and FDI earner for the Indian economy.
During the period April 2000 to March 2017, the auto industry has attracted FDI worth USD 16.67 billion as per data published by Department of Industrial Policy and Promotion (DIPP), Government of India. This accounted for 5.02 percent of total FDI flows into the country, making it the fifth largest FDI attracting segment.
Indian Automobile sector plays a prominent role with more than 7 percent contribution to the Gross Domestic Product (GDP).
Rising disposable income, growing urbanization, expanding rural market and government initiatives like Smart Cities, promoting the country as the Research & Development (R&D) center 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.