India's Automobile Industry: A Comprehensive Overview
1. Scale & Economic Significance
• India ranks 4th globally in automobile production and has risen to become the 3rd
largest car market by sales as of 2025 Wikipedia+1.
• The sector contributes around 7.1% of India’s GDP, employs millions across the
value chain, and constitutes 8% of total exports Wikipedia+1.
2. Production, Demand & Export Dynamics
• In FY25, India’s production of passenger vehicles, commercial vehicles, three-
wheelers, two-wheelers, and quadricycles reached 310 million units, with 24.8
million units produced in March alone IBEF.
• Automobile exports grew by 19% in FY25, totaling over 5.3 million units, driven by
strong global demand IBEF.
3. Emerging Trends & Future Outlook
• Premiumisation is transforming the market. While volumes grew ~6%, revenue
rose over 10% due to demand for advanced trims, ADAS, sunroofs, and comfort
features The Economic TimesETAuto.com.
• CNG vehicles saw exceptional growth—38.5% in volume and 46% in revenue—
highlighting their rising appeal The Economic Times.
• SUVs and MPVs continue to dominate, offering both volume and margin gains The
Economic Times.
4. Electric & New Energy Vehicle Momentum
• EV sales crossed 1.4 million units in 2024, with market share rising from 4.44% to
5.59% CS Conversations -.
• Tata Motors led with 61,496 EV units, followed by MG with 21,484 units CS
Conversations -.
• The Tata Harrier EV, launched mid-2025, features advanced specs like ADAS, AWD,
and up to 627 km range Wikipedia.
• Government policies drive EV adoption: the PM E-DRIVE scheme (2024–2026) is
accelerating infrastructure development and manufacturing eco-system growth
IBEF.
• By 2030, 30% of new vehicle sales are expected to be electric IBEF.
5. Safety Standards & Infrastructure
• The Bharat NCAP, launched in August 2023, mandates star-based safety ratings.
Notable early adopters include Tata Nexon and Mahindra XEV 9e, both achieving 5-
star ratings Wikipedia.
6. Geographic Clusters & Global Investments
• Chennai’s Automotive Corridor, dubbed the “Detroit of Asia,” contributes ~30% of
India’s vehicle production and 35% of components manufacturing Wikipedia.
• VinFast, the Vietnamese EV brand, is establishing a massive manufacturing facility
in Tamil Nadu, slated to begin operations by mid-2025, with a capacity of up to
150,000 units annually Wikipedia.
7. Policy Developments & Market Shifts
• In August 2025, the government proposed cutting GST on small cars from 28% to
18% and reducing insurance GST, triggering a surge in auto stock prices ahead of
Diwali Reuters+3Reuters+3Reuters+3The Economic Times.
• Meanwhile, new U.S. tariffs on auto parts threaten India’s $7 billion auto-
component exports to the U.S., potentially impacting 15–20% of exports The
Economic Times.
• Qualcomm is localizing automotive module production in India, aiming to double
its auto revenues by 2029 The Times of India.
Conclusion
India’s automotive industry stands at a pivotal juncture—marked by scale, innovation,
sustainability, and policy dynamism. With evolving consumer preferences, regulatory
support, and strategic investments in EVs and safety, the sector is poised to accelerate its
transformation and possibly surpass global benchmarks in the near future.
