Sharp Curve Ahead

From more stringent safety and emission norms to a bigger fundamental shift TOWARDS ELECTRIC VEHICLES, THE FAST growing Indian automobile industry is staring at an unprecedented churn.

- Sumant Banerji

Over the last decade, the Indian automobile industry witnessed robust growth, made a mark globally and is finally doing justice to its latent potential. A mix of prudent regulatory framework that laid the foundation of India as a global hub for small cars and two-wheelers, coupled with an aggressive industry saw turnover of the sector treble from an estimated ₹1.65 lakh crore in 2006 to nearly ₹5 lakh crore in 2016.

Barring China, no other country has witnessed this kind of growth in a decade when the global economy was singed by the 2008 economic recession. Today, India is the largest producer of two-wheelers and tractors globally, the fourth largest car producer and among the top 10 commercial vehicle manufacturing nations. And, every third small car in the world is manufactured in India now.

Yet, the industry has only scratched the surface of the huge potential that exists. India, at just 24 cars per thousand people, compared to 500 for developed economies and a world average of 170, has a long way to go before the market begins to saturate. The government’s own projections for the next decade under the Auto Mission Plan 2016-26 (see Proposed Auto Policy), sees turnover grow more than three-fold between ₹16,16,000-18,88,500 crore based on an average GDP growth of between 5.8-7.5 per cent. That would generate over 65 million jobs, direct and indirect, over and above the 25 million generated in the previous decade.