The automobile industry is one of the fastest-growing industries at the moment in India. There is a heavy rise in automobile manufacturing units all over India. India is home to four large auto manufacturing hubs: Delhi-Gurgaon-Faridabad in the north, Mumbai-Pune-Nashik-Aurangabad in the west, Chennai- Bengaluru-Hosur in the south and Jamshedpur-Kolkata in the east. Particularly in Chennai, there is a sudden boom in automobile manufacturing industries in the past couple of decades. Multinational companies like Hyundai, Ford, Volkswagen, and several other companies opened their manufacturing units on the outskirts of Chennai. Which is why Chennai is famously known as the Detroit of India.

The Automobile Industry contributes around 7.1% to India’s GDP by volume. India is also the fourth-largest producer in the world with an annual production of 25 million vehicles in 2016-17 and is the largest manufacturer of two-wheelers, three-wheelers, and tractors in the world. Six million-plus hybrid and electric vehicles to be sold annually, by 2020. By 2020, India is expected to be the third-largest automotive market by volume in the world, after China and the USA. 

Global car majors have been ramping up investments in India to cater to growing domestic demand. These manufacturers plan to leverage India's competitive advantage to set up export-oriented production hubs. A greater push has been given by government schemes such as FAME and NEMMP 2020 to promote Electric cars. The interest of foreign manufacturers setting up their facilities is further supported by the presence of a large pool of skilled and semi-skilled workers and a strong educational system.

An emerging global hub for sourcing auto components. Geographically closer to key automotive markets like the ASEAN, Japan, Korea, Europe, and huge domestic market. Cost competitive as compared to other manufacturing countries. India offers a reduced cost by 10-25 percent relative to that offered by Europe and Latin America. Favorable trade policy with minimal restrictions on export-import. In addition, specific incentives are available for export-oriented units and export processing zones. India’s increasing integration in Global Value Chains to further provide impetus to the sector. Presence of enabling infrastructures like automotive training institutes and auto design centers, special auto parks and virtual SEZs for auto components.

Fastest growing major economy in the world with GDP growth rate of above 7%. A growing working population and an expanding middle-class are expected to remain key demand drivers. The presence of a large pool of skilled and semi-skilled workforce and a strong educational system. The size of the Indian Auto Component Industry is around USD 43.5 billion (2016-17) and contributes 2.3% to India’s Gross Domestic Product (GDP). Auto Component Industry registered a Compound Annual Growth Rate (CAGR) of 7% over 2011-12 to 2016-17, Indian auto component industry is expected to register a turnover of USD 115 billion by 2020-21 and USD 200 billion by 2026. In the last financial year, the auto component exports contributed 4% to India’s overall exports. Exports increased to USD 10.90 billion in 2016-17. Domestic Aftermarket in 2016-17: USD 8.4 billion. The industry is projected to be the third-largest in the world by 2025.

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