Indian Auto Industry to Hit $300B by 2026; Eyes Innovation, Expansion

India's booming auto market is set to hit a significant milestone, with projections indicating it will reach USD 300 billion by 2026. This remarkable growth is fueled by several factors, including rising income levels, urbanization, and an expanding middle class with increasing purchasing power. 
 
In March 2024 alone, the Indian auto industry produced a total of 2,325,959 units across passenger vehicles (PVs), three-wheelers (3Ws), two-wheelers (2Ws), and quadricycles. The majority share was held by two-wheelers, at 1,487,579 units sold domestically in March. 
 
The first quarter of 2024 saw the production of a staggering total of 7,394417 units, encompassing commercial vehicles (CVs), three-wheelers, and two-wheelers. Again, two-wheelers maintained their strong hold, with sales reaching up to 4 million plus during domestic sales for the January–March period. 
 
For the financial year from April '23 to March '2,the Indian automotive industry reported an impressive total production figure standing at approximately over a quarter billion, i.e., 284 million+. 
 
India holds prestige as being home to the world's largest manufacturer of both motorcycles (over 21 million bikes are manufactured annually) and tractors. It also ranks third worldwide in heavy truck manufacturing while coming in fourth globally in car manufacturing. 
 
A cumulative equity FDI inflow worth US$35.40 billion between April '00 and September23 has been attracted to this sector, signifying its lucrative potential. Notably, government initiatives have significantly contributed towards propelling growth, further leading automobile exports from India to touch the almost five million mark, i.e., 47 lakh+ in FY'23, which substantially contributes towards GDP while providing employment opportunities for about nineteen million directly or indirectly. 
 
With EV adoption gaining momentum rapidly, it is projected that India will become the third-largest EV market by '25, with around two to five million vehicles on the road. The EV market presents a massive investment opportunity worth over USD 200 billion in the coming  eight to ten years, with the EV market expected to grow at a CAGR of 49% between '22 and30. 
 
Consumer preferences are now shifting towards larger and more powerful vehicles across all segments, which is reflected in the increasing demand for utility vehicles (UVs) and medium and heavy commercial vehicles (M&HCVs). 
 
With initiatives such as Make in India, Automotive Mission Plan 2026, National Electric Mobility Mission Plan'20, Vehicle Scrappage Policy revamp, and the introduction of Bharat NCAP, the government's commitment towards fostering innovation and sustainability in the automotive sector is underscored. 
 
Expected to reach USD $54.84 billion by '27 from its current size, the Indian passenger car market will see CAGR growth of over nine percent between '22 and27. Meanwhile, the global EV market is projected to grow fivefold, reaching up to USD$1318 billion by '28. 
 
Recent developments like Ola Electric's IPO launch and Mercedes-Benz reporting record half-yearly sales figures, along with government incentives for clean technology vehicles, indicate the dynamic potential this sector possesses. 
 
As the industry readies itself for further growth while solidifying its position as a global automotive hub leading the charge in the EV revolution, future prospects indeed look promising! With both domestic and international players recognizing the potential opportunities offered here, investments are pouring heavily into this lucrative market. 
 
Alongside auto-vehicle segment expansion, booming business can also be seen within the automotive aftermarket segment, which, according to forecasts, should reach around the 32 billion dollar mark, i.e., USD 32 billion by'26. This includes a wide range of products like vehicle parts, accessories, maintenance, repair services, etc. 
 
CEO of Gavansa Enterprises Ashish Sharma said, India's automotive industry stands at a crucial juncture, ready to lead the world transition to sustainable mobility and technological advancement." He added, "Collaboration and innovation are cornerstones of success in today’s auto industry." 
 
The growing demand for aftermarket products and services is driven by factors like increasing vehicle parc and a rising consumer awareness shift towards vehicle customization. 
 
Furthermore, the Indian auto component industry is gearing up for exponential growth in exports. Projections indicate that exports from this industry are set to grow fivefold in the next 10 years. 
 
India's auto components sector is already a significant contributor to the country's exports, and this anticipated surge underscores the industry's potential to become a global powerhouse. 
 
Factors such as competitive pricing, quality standards, and technological advancements are expected to drive this robust growth in exports. (ANI)