The automotive sector has been seen as a bellwether of the economic activity of the country for many years now. A clear indicator of the growth in standards of living as well as one of the most important components of the manufacturing sector growth, the auto industry in among the largest in the world. To that end, successive governments have also done their bits to encourage the industry since it is one of the biggest employment generators, GDP contributor and FDI earner. The Automobile Mission Plan 2016-2026 aims at making India among one of the top three automobile manufacturing centres in the world.
The Government of India recently released the Make in India Automotive Sector report towards highlighting the progress of the Automotive Sector in terms of production enhancements as a result of the policies adopted by the Government of India. As per this report all the major parameters of manufacturing progress which are production, exports and sales have seen a healthy increase and has shown an impressive growth momentum. The most important Key Takeaways from the report are:
The leading Automobile companies of the world, such as Isuzu Motors, Ford Motors, TATA Motors and Suzuki Motors etc. have invested quite heavily in the sector thereby creating huge manufacturing capabilities to take on much larger orders from across the globe. Whereas Isuzu, Tata, Force Motors, Suzuki, Mercedes Benz and Magneti Mareli all came up with their new plants in the last two years, many other companies have set up Research and Development centres towards development of more models and newer technologies.
Rise in Production, Exports and Sales
All the three parameters of Production, Exports and Sales showed healthy increases with the Production increasing by 2.6% in FY 015-2106 with a total production output of 23,960,940 vehicles. At the same time, the sale of passenger vehicles increased by 7.24% in FY 2015-16 with the utility vehicles growing at 6.25%, Vans at 3.58% and Passenger Cars at 7.87%. The commercial vehicles segment grew at a robust 11.51% wit het medium and heavy commercial vehicles segment growing the fastest, at 29.91% over the previous year. Similarly, three wheeler sales grew by 1.03%, two wheelers by 3.01% along with a healthy increase in the number of electric and hybrid vehicles. The automobile exports also great at 1.91% in spite of the tough global economic environment. Two wheelers accounted for the largest share of exports at 69.4% in FY2015-2016.The auto component industry also grew by 8.8% contributing 4% to the overall Exports of the country.
Fiscal Incentives by the Government
There were several incentives offered to the Automobile manufacturing companies to promote the industry in a big way. The Excise duty on chassis of ambulance was reduced from 24% to 12.5% the incentives on the electric and hybrid vehicles were also given by way of reduces excise duties. Along with these various incentives were given to the creation of skilled manpower in the sector through the Automotive Skill Development Council as well as increasing the budget outlay of National Automotive Testing and R&D Infrastructure Project (NATRiP) TO 3727 Crores in July 2016.
As is evident, the Government of India has been promoting the automotive production in this country in a big way and has taken various steps towards capacity building and research and development to increase global competencies in the automotive sector. This Automotive Sector Report offers a detailed insight into all these efforts of the Government and the Industry.