Automobile
Dalal Street Investment Journal|July 05. 2021
The automobile industry in India is the world’s fifth-largest. The Indian automotive industry, including component manufacturing, is expected to reach ₹16.16-18.18 trillion (USD 251.4-282.8 billion) by 2026.

The industry attracted foreign direct investment (FDI) worth USD 25.40 billion between April 2000 and December 2020, accounting for 5 per cent of the total FDI during the period, according to data released by the Department for Promotion of Industry and Internal Trade (DPIIT). The Government of India encourages foreign investment in the automobile sector and has allowed 100 per cent FDI under the automatic route.

In the Union Budget 2021-22, the government introduced the voluntary vehicle scrappage policy, which is likely to boost demand for new vehicles after removing old unfit vehicles currently plying on the Indian roads. The Union Cabinet outlaid ₹57,042 crore (USD 7.81 billion) for automobiles and automotive components sector in production-linked incentive (PLI) scheme under the Department of Heavy Industries. The Indian automotive industry has been reeling under a series of unprecedented problems since March 2020 that has crippled production, productivity and sales.

Between the challenges of the transition to BS-VI norms, the coronavirus pandemic, nationwide lockdown, supply chain constraints and labour migration, the industry has been beset with economic uncertainty. However, though the year began with zero production and negligible sales, the sector has got back on its footing faster than expected with sequential growth in month-on-month sales. The revival can largely be attributed to pent-up demand, preference for personal mobility during the pandemic, easing of supply chains, labour availability, new launches, pushing up of stocks at dealerships and the high expectations from the festive season towards the end of the year.

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