Recently, NITI Aayog released a significant report titled “Automotive Industry – Powering India’s Participation in Global Value Chains.” The report examines the current landscape of India’s automotive sector, identifies key challenges, and outlines strategic recommendations to strengthen India’s position in global markets.
Global and Indian Automotive Landscape
In 2023, global automobile production reached approximately 94 million units, while the global automotive components market was valued at USD 2 trillion. India emerged as the fourth-largest automobile producer worldwide, manufacturing nearly 6 million vehicles annually. The country has a strong footprint in both domestic and export markets, particularly in small cars and utility vehicles. Government initiatives like Make in India continue to enhance India’s competitive edge.
Emerging Trends in the Automotive Sector
The global automotive industry is undergoing a transformative shift toward electric vehicles (EVs), spurred by growing consumer demand for sustainability and tightening regulatory standards. EV sales are rising steadily, reshaping the industry’s manufacturing dynamics. Battery production hubs are emerging in regions such as Europe and the United States, opening new avenues for investments in lithium and cobalt mining.
Simultaneously, the adoption of Industry 4.0 technologies—including Artificial Intelligence (AI), Machine Learning (ML), the Internet of Things (IoT), and robotics—is revolutionizing manufacturing, driving increased efficiency, productivity, and flexibility.
Challenges Facing India’s Automotive Sector
Despite its scale, India holds only a 3% share in the global automotive component trade, valued at roughly USD 20 billion. Major challenges hindering growth include high operational costs, inadequate infrastructure, limited integration into global value chains, and low investment in research and development. India’s presence in high-precision component segments remains minimal, affecting overall competitiveness.