India's automotive industry is a vital pillar of the nation's economic structure, contributing 7.1% to the national GDP and a significant 49% to manufacturing GDP. This sector is crucial not only for economic growth but also for creating millions of jobs across the country. With vehicle production exceeding 28 million units in FY23, the industry maintains strong linkages with key sectors such as steel, electronics, and Information Technology (IT), underscoring its integral role in the broader industrial ecosystem.

Despite its robust foundation, India’s participation in global trade for auto components remains relatively low, with the country holding only a 3% share in the globally traded auto components market. The market size is valued at approximately Rs. 1,72,200 crore (US$ 20 billion), indicating substantial untapped potential. According to a report by NITI Aayog titled ‘Automotive Industry: Powering India’s Participation in Global Value Chains (GVCs),’ launched on April 11, 2025, there is a clear roadmap to scale up India’s automotive industry and strengthen its global trade footprint.

Vision 2030 for India’s Automotive Industry:

The Vision 2030 roadmap laid out in the NITI Aayog report aims to expand India’s automotive sector, targeting a production goal of Rs. 12,48,450 crore (US$ 145 billion) by 2030. Alongside this, the Vision includes raising exports to Rs. 5,16,600 crore (US$ 60 billion), while generating 2–2.5 million jobs. The ambitious objective is to increase India’s global share in automotive trade from its current 3% to 8% by 2030, positioning India as a competitive hub in the global value chains (GVCs). Additionally, the country aims to develop a trade surplus of Rs. 2,15,250 crore (US$ 25 billion) in the automotive sector by this time.

To achieve these targets, the report outlines several strategic reforms and interventions focused on key areas such as innovation, localisation, technology advancement, and collaboration with international partners. This will include a focused effort on high-value, precision auto components production, enabling India to become a significant player in the global automotive manufacturing ecosystem.

Government Schemes Supporting the Industry:

The Indian government has introduced multiple schemes to support the automotive industry’s growth trajectory:

• Make in India and Atmanirbhar Bharat (Self-Reliant India) initiatives aim to boost domestic manufacturing capabilities.

• The Production Linked Incentive (PLI) Scheme has been instrumental in promoting Electric Vehicles (EV) manufacturing and local production of auto components.

• Other schemes such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) and the PM E-Drive Scheme have mobilized over Rs. 66,000 crore (US$ 7.69 billion) to support EV adoption, localisation, and component manufacturing.

These efforts are designed to increase India’s manufacturing capacity and export competitiveness, making India a key player in the global market. However, the industry continues to face challenges, including a 10% cost disadvantage compared to China, primarily due to high logistics, raw materials, and financing costs. Addressing these challenges through operational expenditure support, Research and Development (R&D) incentives, and Intellectual Property (IP) transfer is crucial for India to achieve its ambitions in global value chains.

Overcoming Challenges and Future Outlook:

The structural inefficiencies in India’s automotive industry must be addressed through focused reforms aimed at reducing costs and improving productivity. Key interventions recommended in the Vision 2030 roadmap include:

• Supporting Research and Development (R&D) initiatives to foster innovation and reduce dependence on imports.

• Encouraging intellectual property (IP) transfer and knowledge-sharing partnerships with global leaders in automotive technology.

• Promoting the adoption of Industry 4.0 technologies to enhance production efficiency and reduce costs.

Furthermore, India’s geographical advantage, access to a large consumer base, and ongoing policy reforms present substantial opportunities for international collaborations and enhanced participation in global value chains.

By addressing these challenges and leveraging strategic reforms, India’s automotive sector has the potential to become a competitive hub for clean, smart, and connected mobility, supporting the country’s larger ambitions for sustainable growth and increased presence in global markets.

As the industry works towards implementing the Vision 2030 goals, the rise of electric vehicles, autonomous technology, and digitally connected mobility solutions will drive the transformation of India’s automotive sector, making it a key player in the future of global automotive manufacturing.

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