The Indian automotive industry is the 4th largest in the world. Because of factors such as growth in the working population, increase in the disposable income of individuals, and availability of various financing schemes, the demand for automotive products in both commercial and consumer segments has been increasing. The sector witnessed a year on year growth rate of ~11.3% in FY 2017.
India has become a global destination for manufacturing of automobiles and support components, propelling the growth of ancillary automotive industry in India. With the changes in automotive regulations, safety and fuel efficiency have become a focal point of the industry.
With the ‘’Automotive Mission Plan’’, the government plans to put India in the league of top 3 countries in terms of manufacturing, engineering and export of vehicles and components. One of the key focus has been a shift towards the electric vehicles segment which has led to an increase in the demand for various components that were not manufactured in India earlier. India’s popularity in the automotive sector can be attributed to existing automobile clusters, availability of support industries, inexpensive skilled workforce and governmental support in terms of subsidies.

Growth Drivers

  • The demand for foreign vehicles in India has been increasing steadily – a factor that has helped channelise investments in this sector.
  • Increase in the disposable incomes in Tier II, Tier III cities, and rural areas has increased the demand for two-wheelers and low-cost consumer & commercial vehicles.
  • Doubling of customs duty from 7.5 % to 15% for engines, engine components, gearboxes, transmission shafts, drive axles, brakes, radiators, silencers, and clutches is expected to boost local manufacturing of such items in India.

Key Players


  •  Mercedes-Benz
  •  BMW
  •  Hyundai
  •  Renault-Nissan
  •  Mitsubishi
  •  Suzuki
  •  VW
  •  Honda


  • Tata (Jaguar)
  •  Bajaj Auto
  •  Mahindra & Mahindra
  •  Hero Motors
  •  Force Motors
  •  TVS Motors
  •  Eicher Motors
  •  Maruti Suzuki

Market Statistics

  • Automobile industry grew 11.3% in FY 2017, The passenger vehicle segment exhibited a growth rate of 8.1%; commercial vehicle segment of 15.2%; and two-wheeler market of 11.8% on a YoY basis.
  • Approximately, 24.97 million vehicles were sold during FY 2018 in India.
  • The automotive industry has attracted Foreign Direct Investment (FDI) worth ~USD 18.5 billion during 2000-2017.