The Indian automobile market has, however, moved no further ahead. Country with plans to change the world and shock nations as well as car automakers by 2029. Union Minister Nitin Gadkari has said that India will emerge as the world's largest automobile industry by 2029 when the country will also emerge as the third-largest economy in the world. This was considered a mirror of the dreams of India, which had to emerge as an industrial giant and be able to change the world network for automotive production. This comprehensive analysis has brought out the various dimensions of India's aspirations in the automotive industry—approaches, challenges, and implications towards the objective to emerge as a major player in global manufacturing.
Current Status and Future Expansion Plans
Presently, India is the third-largest auto market in the world, following the US and China. The percent of "Made in India" in the vehicles plying on roads today is only going to rise. The automobile segment, in the year 2023, reflected an increase of 4 percent in exports. In 2023, India's car exports would race up to 6,71,384 units. It was this seemingly inexorable rising momentum that had convinced but somehow remained as the best-kept secret till now, that India under the leadership of Narendra Modi could be the largest automobile manufacturer in the world.
Gadkari laid down basic principles based on which the growth of the auto industry in India should be augured. Focus on the best road network, alternative fuels, and reducing logistics costs is what the center wishes to achieve.
It is quite noteworthy in this respect that India wants to be the world leader in both cleaner and alternative fuels. Equally, the central government is conscious of moving away from fossil fuels that cost Rs 16 lakh crore every year into other modes of energy.
Informing this, Gadkari added that the Indian Oil Corporation and the government have also taken up a project in Panipat where rice straw is used for creating bio-bitumen along with ethanol. Indeed, Prime Minister Narendra Modi egged the auto industry on to make sure most of the world's markets were serviced out of vehicles made in India, and for proper reasons, steer clear of speaking about boosting India's auto exports abroad. India benefits from the change in global supply chains, especially the one that moves away from China. A report published by consulting firm Arthur D Little suggests that if it focuses on making its exports competitive worldwide, then by 2035, the auto industry of India can garner an additional $400 billion.
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According to the same report, when the world seeks a credible alternative to China, India would be such a country. The forecasts for India's car industry, valued at $250 billion today, reach a valuation of $600 billion by 2035.
Why is the Indian Automotive sector booming?
The policy will also encourage automakers under the Centre's performance-linked incentive (PLI) program, extended by a year to January 1. The total budget outlay for the scheme has been increased to Rs 25,938 crore. However, the incentives, that are given from FY23 to FY27, are being compared with the previous tenure of the scheme, and incentives being provided by the scheme shall now be available from FY24 to FY28.
It is proposed in the auto sector to invest a total of Rs 67,690 crore, which is far more than the fixed targeted amount of Rs 42,500 crore, as estimated earlier. Of this, Rs 13,037 crore has already been invested, which gives an estimate of this domain under the scheme: 1.48 lakh jobs will be created.
Therefore, the PLI scheme would aim to remove the financial barriers involved for the Indian Automotive Industry to produce such high-tech products. The incentive program, therefore, would have the objective that most of the domestic companies plan to reinvest in a domestic global supply chain for high-tech automotive products.
PLI scheme for ACC, and then the other FAME I and II schemes—the government is working on two initiatives to help the country shift from conventional fossil fuel-based auto transportation systems to more advanced, sustainable, ecologically friendly, and economically efficient electric vehicle systems.
With over 1.5 million EVs sold last year, a 50% increase from 2022, India saw a notable uptick in EV sales. The percentage share of EVs sold in the total increased to 6.38 percent from 1.75 percent in 2021. It showed that the car-buying class in India is trending to buy more EVs. The goal of bringing over two million EVs to the domestic market this year seems very doable.
Will we be able to become one?
Until the full potential of the Indian automobile industry gets realized, the ambitious plan of the Indian government to establish India as another global manufacturing hub will remain another paper dream. Commerce and Industry Minister Piyush Goyal asked the auto industry to set targets wherein a large number of passenger vehicles are expected to be exported, with 50% of them likely to be exported by companies by 2030.
That percentage had been just a little less than 14% of the last fiscal year. The minister had categorically stated that the industry should fix higher targets and should not be satisfied with a poor share of 25% in the case of exports.
At the same time, we know that India is reaping benefits as a result of several factors. Firstly, some of the reasons are due to the long-term effort by the government, as it has almost fully fulfilled the compliance of international standards in its regulations. Second, products that have then the label "Made in India" within the automotive division are generally those products that do not need a wide level of modification to be relevant for foreign customers. Not only this, but also India benefits in other ways, such as low-cost manufacturing, arbitrage of labor costs, availability of skilled labor, and a well-established supplier base, combining to bestow a competitive cost advantage to the automakers.
The future shines for the automobile industry in India. With the increase in income and rolling of the economy at a faster pace, one of the industries that stand to gain a lot is the automobile industry. This would further energize the notion of a 'Viksit Bharat,' as Indian automakers are now getting more and more thrilled to export their products. It will further excite the ambition of turning the country into a major hub for global manufacturing.
Though many challenges lie ahead, there is a host of opportunities and implications for India and the Global Auto Industry. All this became possible, for India, due to the abundant natural resources, policy support, and strategic initiatives that lay in its lap. India's journey in the automotive sector might as well go under the eyes of the world and herald a new dawn of innovation, sustainability, and international collaboration.
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