11 Sep 2024
India's automotive industry is set to play a major role in significant economic growth. This indicates the industry will help India reach a $32 trillion GDP by 2047. The industry is booming because of rising demand for electric vehicles and efforts to boost local production. As the industry continues to expand, the automotive industry promises job creation and reduces import reliance making India a global automotive leader.
Pawan Goenka, Chairman of IN-SPACe at the Department of Space, highlighted the potential growth, especially with the growing popularity of electric vehicles.
Domestic Auto Industry Reaches Rs 20 Lakh Crore in FY24
As of FY24, the Indian domestic auto industry's value has already crossed Rs 20 lakh crore. Experts project that by 2047, this figure could rise to $1.6 trillion (approximately Rs 134 lakh crore). Mr. Goenka shared these insights at an event organized by the Automotive Component Manufacturers Association (ACMA) in New Delhi, emphasizing the sector's financial growth.
In addition to its financial impact, the auto sector plays a pivotal role in job creation, both directly and indirectly. Currently, the industry contributes about 6.8% of India's GDP and has grown steadily at a rate of 17% annually over the past two decades. This steady growth has made the sector a cornerstone of India's economic landscape.
Strengthening Local Production of Auto Components
Vinod Aggarwal, President of SIAM, announced that India's auto industry reached ₹20 lakh crore in FY24. Furthermore, it contributes 14-15% of the total Goods and Services Tax (GST) collected in India. Aggarwal also stressed the need to enhance local production of key components, particularly electrical and electronic parts, reducing dependency on imports.
Both SIAM and ACMA have set ambitious goals to increase the localization of auto parts in India. They aim to cut imported components from 60% to 20% by 2025. This change could save the country ₹20,000 crore to ₹25,000 crore over the next five years. These efforts will also help India build a more self-reliant automotive ecosystem.
Electric Vehicles to Drive Future Growth
Union Minister Nitin Gadkari expects the cost of electric vehicles in India to match that of petrol and diesel vehicles soon. He anticipates this shift within the next two years, which will likely boost EV adoption across the country, further strengthening the automotive sector's growth.
With the continued rise of electric vehicles and increased efforts to localize production, India's automotive sector is well-positioned for the future. The industry's growth will help the country's economy and strengthen India's position as a global leader in the automotive market.
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