8/25/23, 11:33 PM Automobile | Make In India

Automobile
Summary

 India is one of the world’s largest tractors & two-wheeler manufacturer.*

 In terms of manufacturing output, India is the 2nd largest in two-wheelers, 7th largest in commercial vehicles, 6th in passenger vehicles
and the largest in tractors globally. *

 India is projected to be the world's third-largest automotive market in terms of volume by 2026. *

 The Automobile industry in India is a significant driver of macroeconomic growth and technological development. *

 Automobile contributes nearly 7% to India’s GDP and 35% of the manufacturing GDP.*

 The EV market is expected to grow at CAGR of 49% between 2022-2030 and is expected to hit 10 Mn-unit annual sales by 2030. The EV
industry will create 50 Mn direct and indirect jobs by 2030.

 The Department of Heavy Industry has helped set up India's first Machine Tool  Park (TMPT) with a world-class facility  on 530 acres of
land. *

 Department of Heavy Industry entails promoting engineering industry viz. machine tools, heavy electrical, industrial machinery and auto
industry and administration of 29 CPSEs and 5 autonomous organizations. *

 The industry provides direct and indirect employment to over 19 mn people. *

Reasons To Invest

 India’s Automotive Industry is worth more than $222 Bn and contributes 8% of the country’s total export and accounts for 7.1% of India's
GDP and is set to become the 3rd largest in the world by 2030.

 India’s trucking market is expected to grow over 4x by 2050. The number of trucks is expected to more than quadruple, from 4 mn in 2022
to roughly 17 mn trucks by 2050. *

 India is expected to emerge as the third-largest Automotive market in the world in terms of volume by 2026, followed by China and USA. *

 India gets Asia’s longest and world’s fifth-longest High-Speed Track for automobiles. *

 The International Centre for Automotive Technology (ICAT) is a top-class automotive testing, certification and R&D service provider under
the support of NATRiP (National Automotive Testing and R&D Infrastructure Project), Government of India. ICAT is situated in the northern
automotive hub of India in Manesar. *

 Nearly 80% of Delhi's entire bus fleet to be electric by 2025. *

 GOI has chosen 9 expressways where 6,000 charging stations have been sanctioned and about 3,000 shall be installed soon to reduce
the problem of charging in electrical vehicles. *

 GOI is providing support up to INR 362 crore per gigawatt in this sector of EVs under the PLI Scheme.*

 Banks and non-banking financial companies (NBFCs) in India have the potential to achieve an electric vehicle (EV) financing market size
of INR 40,000 crore (USD 5 bn) by 2025 and INR 3.7 lakh crore (USD 50 bn) by 2030. *

Key Achievements

 BHEL has spent around INR 30 cr on R&D expenditure and filled 34 patents/copyrights.*

 BHEL supplied the Steam Turbine and Generator package for the project India's first of its kind, highest rated, 700 MWe Pressurized
Heavy Water Reactor.*

 The country is swiftly embracing electric vehicles as a part of its vision for achieving Net Zero Emissions.*

 Passenger car exports witness a growth of 42.9%.*

 E-Amrit has been developed and hosted by NITI Aayog under a collaborative knowledge exchange programme with the UK government
and as part of the UK–India Joint Roadmap 2030, signed by the Prime Ministers of the two countries. E-Amrit is a one-stop destination for
all information on electric vehicles—busting myths around the adoption of EVs, their purchase, investment opportunities, policies, subsidies,
etc.*

 TCIL launches first e-vehicle charging station in South Delhi area at South Extn. Part I with support of SDMC to help in popularizing use
of e-vehicle and in reducing pollution in metro city of Delhi.*

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 Power Grid Corporation of India Limited (POWERGRID), has laid the foundation stone for first ever Electric Vehicle Charging Station
(EVCS) in the state of Meghalaya at its office complex at Lapalang, Shillong.*

 World's most advanced technology is developed Green Hydrogen Fuel Cell Electric Vehicle (FCEV) - Toyota Mirai, the first of its kind
project in India which aims to create a Green Hydrogen based ecosystem in the country.*

 Under the Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase-II (FAME India Phase II) of the Ministry of
Heavy Industries, 2877 public EV charging stations have been sanctioned in 68 cities.*  

 Patent was granted by Patent Office to ARAI for Dual Fuel System for Induction of CNG into a Diesel Engine.*

Recent Announcements

21st April 2023: PFC has sanctioned a loan of INR 633 cr to support the acquisition of 5,000 passenger EVs and 1,000 cargo EVs.

Read More

28th March 2023: Central government sanctions INR 800 cr under FAME India Scheme Phase II on 28.3.2023 to the PSU Oil
Marketing Companies (OMC) - Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) - for setting up 7432
public fast charging stations across the country.

Read More

27th March 2023: Karnataka Digital Economy Mission, on behalf of Karnataka government launches a Drone and EV cluster in
Belagavi.

Read More

21st March 2023: 2,56,980 electric vehicles registered in India in 2023 as of 15.03.2023.

Read More

22nd  February 2023:  Shri Alkesh Kumar Sharma oversees the Transfer of indigenous Technology on Smart Energy Meter and
Electric Vehicle Charger to Industry Partners.

Read More

Statistics

 The Automobile industry can be categorized into subsectors such as  passenger vehicles, commercial vehicles, three-wheelers and two-
wheelers. Two-wheelers occupy the dominant position, constituting about 80% market share and overall passenger vehicles comprise 13%.

 In April 2021 to March 2022, Passenger Vehicle Exports increased from 404,397 to 577,875 units (registering a positive growth of 42.9%),
Commercial Vehicle Exports increased from 50,334 to 92,297 units, Three-Wheeler Exports increased from 393,001 to 499,730 units and
Two-Wheeler Exports increased from 3,282,786 to 4,443,018 units in April 2021 to March 2022 over same period last year.

 The current annual sale of vehicles of all categories is expected to reach 84.5 mn by 2030.  *

 India has a total of 13, 34, 385 Electric Vehicles and 27,81,69,631 non-Electric Vehicle in use. * 

 2,56,980 electric vehicles registered in India in 2023 (till 15.03.2023).*

 6586 Public Charging Stations (PCS) for Evs as of 21.3.2023 operational in India. *

 Export of total number of automobiles increased from 41,34,047 in 2020-21 to 56,17,246 in 2021-22, registering a positive growth of
35.9%. *

 Export of Passenger vehicles including cars increased from 4,04,397 in 2020-21 to 5,77,875 in 2021-22, registering a positive growth of
42.9%.*

 Presently, 07 No.'s of operational WSA facilities are equipped with EV charging stations.*

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Growth Drivers

 The Indian government aims to increase the total industry size to INR 15 lakh cr by 2024. *

 Under FAME Scheme Phase -2, the Centre has sanctioned INR 800 cr for setting up 7432 public fast charging stations across the
country.*

 PFC approves 633 crores loan for 5000 passenger EVs and 1000 cargo EVs.*

 By 2026, as per the Automotive Mission Plan 2016-26, the Automobile industry has the potential to contribute about 12% of total GDP and
create 65 mn jobs.  *

 IREDA, the largest lender of the Renewable Energy sector in India, sanctioned a loan of INR 267.67 crores to BluSmart Mobility for the
purchase of 3,000 all-electric cars. *

 COP 26 President and NITI Aayog launch initiatives to boost electric mobility and promote battery reuse and recycling market in India.*

 There is a shift in preferences of the customers as they have started to move towards larger/more powerful vehicles across all segments:
‒ UVs (amongst PVs) – 49% in FY22 (vs. 39% in FY21) 
‒ M&HCVs (amongst CVs) – 33% in FY22 (vs. 28% in FY21) 

 The Ministry has sanctioned 2,877 electric vehicle charging stations in 68 cities across 25 states/UTs.*

FDI Policy

 Under the automatic route, 100% Foreign Direct Investment (FDI) is permitted along with  full delicensing. Hence, making it easy for
investors to set up their manufacturing plant/shop in India.

 The cumulative FDI equity inflow in the Automobile Industry is USD 34.74 bn during the period April 2000 to March 2023. This constitutes
5% of the total FDI inflow received across sectors. *

Read more about Foreign Direct Investment Policy in India >

Production Linked Incentive (PLI) Scheme

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked
Incentive (PLI) Scheme in the Automobile and Auto Components sectors for Enhancing India’s Manufacturing Capabilities and
Enhancing Exports – Atmanirbhar Bharat.

Financial Outlay- INR 57,042 cr

For more details on PLI Schemes, Click Here

Sector Policy

National Programme on Advanced Chemistry Cell Battery Storage*

 The scheme envisages setting up of a cumulative ACC manufacturing capacity of fifty (50) GWh for ACCs and an additional cumulative
capacity of (5) GWh for Niche ACC Technologies.

 In addition to 50 GWh of cumulative ACC capacity, 5GWh of cumulative capacity would be offered to “Niche” ACC technologies of higher
performance with a minimum threshold capacity of500 MWh. This initiative would also be technologically agnostic

Charging Infrastructure for EVs - The revised consolidated guidelines and standards*
 The guidelines have been amended to accelerate the E-Mobility transition in the country.

 The objectives is to enable faster adoption of Electric Vehicles in India by ensuring safe, reliable, accessible and affordable charging
infrastructure and eco-system

National Automobile Scrappage Policy

 The Policy is aimed at creating an ecosystem for phasing out old unsafe, polluting vehicles and replacing them with newer safe and fuel-
efficient vehicles.

 The policy will help in increasing Automobile sales, provide employment, reduce import costs, generate incremental GST revenue and
help to solve the global shortage of semiconductor chip.

 The policy will provide an important link in creating a circular economy (waste to wealth)  for the country.

Fame India Scheme *

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 The Scheme aims to create demand by way of supporting 7000 e-Buses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars and
10 lakh e-2 Wheelers.

 In the First Phase of the FAME Scheme, about 2.8 lakh hybrid and electric vehicles were supported by way of demand incentive,
amounting to about INR 359 crore. The Ministry of Heavy Industries had sanctioned about 520 Charging Stations/ Infrastructure for INR 43
Crore (approx.) under Phase-I of FAME India Scheme.

 The Fame India Scheme II is proposed to be implemented over a period of 3 years with a financial outlay of INR 10,000 cr, for faster
adoption of electric mobility and growth of electric and hybrid technology to improve the eco-system in the country.

 6,315 electrical buses have been sanctioned to various State/City Transport Undertakings under Phase-II of the Scheme.

 Ministry has sanctioned 2,877 Electric Vehicles (EVs) Charging Stations amounting to INR 500 Crore (Approx.) in 68 cities across 25
States/UTs and 1576 charging stations amounting to INR. 108 crores (approx.) across 9 Expressways and 16 Highways.

 GOI allocates INR 1000 crore made under FAME II for provision of EV charging stations.

Automotive Mission Plan 2016-26 (AMP 2026) *

 The Automotive Mission Plan 2016-26 (AMP 2026) outlines the trajectory of growth of the automotive ecosystem in India, including the
glide path of definite regulations and policies that govern research, design, technology, testing, manufacturing, import/ export, sale, use,
repair, and recycling of automotive vehicles, components and services.

 The Automobile industry is projected to be the third-largest in the world, contributing 12% to GDP.

 The industry has the potential to generate USD 300 bn revenue and 65 mn additional jobs by 2026.

 The Automobile industry is one of the prime movers of the manufacturing sector and the “Make in India” initiative. It aims to increase
exports of vehicles by five times. 

 The plan also foresees India to be the first in the world in the production/sale of small cars, two-wheelers, three-wheelers, tractors and
buses; and third in passenger vehicles and heavy trucks.

National Automotive Testing and R&D Infrastructure Project (NATRIP) *

 The project has been set up at a total cost of USD 573 mn to enable the industry to adopt and implement global performance standards.

 It aims at converting India’s unparalleled strengths in IT and electronics with the automotive engineering sectors.

 The main area of focus is on providing low-cost manufacturing and product development solutions.

 Ministry of Heavy Industries & Public Enterprises has constituted NATRIP Implementation Society (NATIS), an autonomous body, for the
execution of NATRIP.

 As a part of the program, 7 test centres have been finalized to set up the test facilities – iCAT, GARC, NATRAX, ARAI, VRDE, NIAIMT,
NCVRS.

National Electric Mobility Mission Plan 2020 (NEMMP) *

 The NEMMP initiative has been taken up to encourage consistent, affordable and competent xEVs (hybrid and electric vehicles) that meet
consumer performance and price expectations through government-industry collaboration.

 Promotion and development of indigenous manufacturing capabilities, required infrastructure, consumer awareness and technology are
additional objectives of NEMMP 2020.

Explore Government policies/schemes in the Automobile sector >

Financial Support

Union Budget 2023-24*

 To exempt excise duty on GST-paid compressed bio gas

R&D Incentives for Industry and Private Sponsored Research

 A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act. A weighted deduction of 200% is granted to assess for
any sums paid to a national laboratory, university or technological institute. The said sum is used for scientific research within a program
approved by the prescribed authority.

Manufacturers with In-house R&D Centre

 Section 35 (2AB) of the Income Tax Act 26, 1961 provides a weighted tax deduction of 150% of the expenditure incurred by a specified
company, on scientific research in the in-house R&D centres as approved by the prescribed authority. This does not include expenditure on
the cost of any land or building. The weighted tax deductions of 150% are effective until 31 March 2020. Consequently, the weighted tax
deductions will be 100%.

State Incentives
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 Apart from the mentioned incentives, each state in India offers additional incentives for industrial projects. Incentives are provided in the
following: rebates in land cost, relaxation in stamp duty exemption on sale or lease of land, power tariff incentives, a concessional rate of
interest on loans, investment subsidies/tax incentives, backward areas subsidies, special packages for mega projects. Few examples are -

Andhra Pradesh

 The government of Andhra Pradesh is committed to providing land at concessional rates, along with 24 hours nonstop power supply.

 Capital subsidy of 50% for common infrastructure in auto clusters and ASMC developers, up to a maximum of USD 3.07 Mn.

 Financial assistance limited to 75% of the cost, subject to a maximum of USD  38,461 for obtaining patent registration. While 50% of all
charges are subject to a maximum of USD 7,692 paid for obtaining quality certification. This is applicable to only MSME units.

 Under marketing incentives, 50% of participation cost with a maximum amount of USD 7,692 to be reimbursed to at the most 10 MSME
units annually, for participating in international trade fairs.

Gujarat

 Auto component manufacturers can either avail general incentives under the Gujarat Industrial Policy 2015, or incentive under  Mega /
Innovative Projects.

Jharkhand

 Jharkhand introduced the Automobile and Auto Component Policy 2016 with an aim to make Jharkhand, a preferred destination for
automobile and auto-component manufacturing units. Provision of financial assistance of 50% for fixed capital investments in building and
common infrastructure up to a maximum of USD  3.07 Mn. 100% electricity duty exemption shall be provided for 10 years from the date of
production.

Export Incentives
 Under the Merchandise Export Incentive Scheme (MEIS), automobile manufacturers get a benefit of 2% on vehicle exports.

 About 20 tariff headings have been considered as “Sensitive items” to be maintained in the negative list of India in most of the trade
agreements.

Area Based Incentives

 Incentives for units in SEZ/NIMZ as specified in respective acts or the setting up of projects in special areas like the Northeast, Jammu &
Kashmir, Himachal Pradesh and Uttarakhand.

Imvestment Opportunities

 Passenger vehicles: passenger cars, utility vehicles, multi-purpose vehicles.

 Two-wheelers: mopeds, scooters, and motorcycles.

 Three-wheelers: passenger carriers, goods carriers.

 Commercial vehicles: light commercial vehicles, medium and heavy commercial vehicles.

 Huge demands for low-cost electric vehicles that are suited for safe short-distance urban commutes (averaging 50-100 km/trip) that are
rugged enough to perform reliably through India's summers and monsoon. 

Explore projects to invest in Automobile sector >  

Sector Reports

1. Year End Review 2022: Ministry of Heavy Industries

2. Electric Vehicles are Poised to Create a $100B+ Opportunity in India by 2030 

Foreign Investors

 BMW (Germany)

 Borgward Automotive India Private Limited (Germany) 27

 Daimler India Commercial Vehicles Pvt Ltd (Germany)

 FIAT (Italy) Ford (USA)

 General Motors (USA)

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 Honda (Japan)

 Hyundai (South Korea)

 Kia Motors (South Korea) 27

 Mercedes (Germany)

 Nissan (Japan)

 Piaggio (Italy)

 Renault (France)

 Sumitomo Corporation (Japan) 27

 Suzuki (Japan)

 Toyota (Japan)

 Volkswagen (Germany)

 Volvo (Sweden)

Agencies

 Ministry of Heavy Industries & Public Enterprises, Government of India

 Automotive Research Association of India (ARAI)

 Society of Indian Automobile Manufacturers (SIAM)

Sources

1. “Year Ender 2019 Ministry of Heavy Industry”, PIB, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1597099 

2. Mckinsey & Company, The future of mobility in India’s passenger vehicle market, https://www.mckinsey.com/industries/automotive-and-
assembly/our-insights/the-future-of-mobility-in-indias-passenger-vehicle-market 

3. Department of Heavy Industries, Annual Report, https://dhi.nic.in/writereaddata/DHI_2018-

19_annual_report/ENGLISH/mobile/index.html 

4. Society of Indian Automobile Manufacturers, Automobile Export Trends, http://www.siamindia.com/statistics.aspx?

mpgid=8&pgidtrail=15 

5. Factsheet on FDI - April  2000  to March 2020,  Department for Promotion of Industry and Internal
Trade, https://dipp.gov.in/sites/default/files/FDI_Factsheet_March20_28May_2020.pdf

6. Society of Indian Automobile Manufacturers, Automotive Mission Plan 2016-26: A curtain raiser,  http://www.siam.in/cpage.aspx?
mpgid=16&pgid1=17&pgidtrail=83

7. “Automotive Mission Plan”, PIB website, Ministry of Heavy Industries & Public Enterprises, https://pib.nic.in/PressReleasePage.aspx?
PRID=1593562

8. Mckinsey & Company, The future of mobility in India’s passenger vehicle market, https://www.mckinsey.com/industries/automotive-and-
assembly/our-insights/the-future-of-mobility-in-indias-passenger-vehicle-market

9. Mckinsey & Company, The future of mobility in India’s passenger vehicle market, https://www.mckinsey.com/industries/automotive-and-
assembly/our-insights/the-future-of-mobility-in-indias-passenger-vehicle-market 

10. Press Information Bureau, Ministry of Heavy Industries & Public Enterprises - ICAT - A World Class Automotive Testing Centre,
https://pib.gov.in/Pressreleaseshare.aspx?PRID=1571387  

11. “Year Ender 2019 Ministry of Heavy Industry”, PIB, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1597099   

12. “Year Ender 2019 Ministry of Heavy Industry”, PIB, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1597099  

13. “Year Ender 2019 Ministry of Heavy Industry”, PIB, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1597099 

14. Indo American Chamber of Commerce, IACC Automotive and Auto Ancillaries Forum, https://www.iaccindia.com/automotive/ 

15. Factsheet on FDI - April 2000 - December 2021, Department for Promotion of Industry and Internal
Trade, https://dpiit.gov.in/sites/default/files/FDI%20Factsheet%20December%2C%202021.pdf

16. Department of Heavy Industries, Office Memorandum,

https://dhi.nic.in/writereaddata/UploadFile/publicationNotificationFAME%20II%208March2019.pdf 

17. "Indian Automobile Industry – Update", Emerging Markets Information Service (EMIS) 

18. "Year End Review 2018 – Ministry of Heavy Industries & Public Enterprises", PIB,  https://pib.gov.in/Pressreleaseshare.aspx?
PRID=1557431 

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19. "Year End Review 2018 – Ministry of Heavy Industries & Public Enterprises", PIB, https://pib.gov.in/Pressreleaseshare.aspx?
PRID=1557431 

20. "Automotive Mission Plan 2016-26: A curtain raiser",  Society of Indian Automobile
Manufacturers, http://www.siam.in/uploads/filemanager/47AUTOMOTIVEMISSIONPLAN.pdf

21. "Automotive Mission Plan 2016-26: A curtain raiser",  Society of Indian Automobile
Manufacturers, http://www.siam.in/uploads/filemanager/47AUTOMOTIVEMISSIONPLAN.pdf

22. Secunded European Standardization Expert in India, Indian Automobile Industry, http://www.sesei.eu/wp-
content/uploads/2018/12/Automotive-Sector-Report_-Final.pdf 

23. Secunded European Standardization Expert in India, Indian Automobile Industry, http://www.sesei.eu/wp-
content/uploads/2018/12/Automotive-Sector-Report_-Final.pdf 

24. Secunded European Standardization Expert in India, Indian Automobile Industry, http://www.sesei.eu/wp-
content/uploads/2018/12/Automotive-Sector-Report_-Final.pdf 

25. Secunded European Standardization Expert in India, Indian Automobile Industry, http://www.sesei.eu/wp-
content/uploads/2018/12/Automotive-Sector-Report_-Final.pdf 

26. Income Tax Department, Section 35: Notified Scientific Research Association,
https://www.incometaxindia.gov.in/Pages/utilities/Notified-Scientific-Research.aspx 

27. Society of Indian Automobile Manufacturers, Performance of Auto Industry during 2018-19, http://www.siamindia.com/statistics.aspx?
mpgid=8&pgidtrail=9 

28. Ministry of Heavy Industries & Public Enterprises, Government of India, https://dhi.nic.in/writereaddata/UploadFile/oct2020.pdf

29. Major Achievements,  Ministry of Heavy Industries & Public Enterprises, Government of
India, https://dhi.nic.in/writereaddata/UploadFile/May,%202020.pdf

30. Major Achievements,  Ministry of Heavy Industries & Public Enterprises, Government of
India, https://dhi.nic.in/writereaddata/UploadFile/DOJan2021.pdf

31. Major Achievements,  Ministry of Heavy Industries & Public Enterprises, Government of
India, https://dhi.nic.in/writereaddata/UploadFile/DO_APRIL2021.pdf

32. Annual Report, https://dhi.nic.in/writereaddata/UploadFile/AR2019_20E.pdf

33. PIB Release,  https://www.pib.gov.in/PressReleasePage.aspx?PRID=1731122

34. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1774214

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