ON THE ROAD TO THE FUTURE

India's auto sector has emerged as a key pillar of economic growth and employment generation, driven by strong manufacturing and export growth, as well as policy support for EVs and innovation. But major roadblocks remain

- UTKARSH AGARWAL

AS INDIA accelerates towards its $5 trillion economic goal, the auto sector is poised to be one of the core drivers. With its vast scale, deep linkages to manufacturing, exports, employment, and technology, the auto sector is increasingly being seen not just as a commercial engine, but also reflecting India’s rise as a credible global manufacturing and innovation hub.

As of financial year 2024-25, India is the third-largest automobile market globally in terms of sales and the fourth-largest in vehicle production, manufacturing more than 31 million vehicles across segments. This includes over 5.06 million passenger vehicles, 1.03 million commercial vehicles, 1.05 million three-wheelers, and a massive 23.88 million two-wheelers. Besides, India exported around 5.7 million vehicles, with growing demand from markets like Japan, Mexico, Latin America, and Africa.

The sector contributes around 7.1 per cent to India’s GDP and 49 per cent to manufacturing GDP, supports over 37 million jobs, and makes up nearly 8 per cent of the country’s total exports. These figures are signs that the health and growth of the Indian auto industry are closely tied to the overall economic momentum of the country.

Policy Driving the Change

Much of this growth has been powered by focused government policies that aim to strengthen domestic manufacturing, reduce import dependence, encourage clean technologies, and make India a central player in global value chains.