India could become the 4th largest carmaker in the world on the back of “Make in India”
Under this initiative, the Government of India is promoting the foreign carmakers to setup their manufacturing facilities in India.
India, currently, sits on the 6th spot on the list of largest car manufacturing countries in the world. Interestingly, India did secure the 5th spot for itself prior to 2020 on a consistent basis. However, the aftermath of the pandemic has led to India sliding to the 6th position. But it is just a matter of time that India regains the 5th spot overtaking South Korea.
In the year 2020, South Korea sold over 35 lakh vehicles compared to just under 34 lakh that India managed to sell. For reference, in 2019, Korea sold around 39.50 lakh cars compared to over 45 lakh cars sold in India. Therefore, it is easy to understand that India has been quite far ahead of South Korea in terms of the number of new vehicles sold in a year.
The main challenge for the Indian automobile industry lies in overtaking mighty Germany on this list. India (51.74 lakh units) did manage to outsell Germany (51.320 lakh units) back in 2018 by a small margin. The numbers in 2019 were also very close with Germany selling just about 1.50 lakh units higher than India.
In 2020, however, this difference was rather significant of around 3 lakh units. The reasons for this can’t be more obvious. Both these countries struggled with the pandemic extremely severely with India still not out of the woods. This is where the initiatives like Make In India come into the picture. Implemented properly, it can change the landscape of the Indian automobile industry completely in the immediate future, making India the 4th largest carmaker in the world.
Make In India
While the “Make in India” is not just restricted to the automobile industry, we are currently discussing its effect within this sector only. Under this initiative, the Government of India is promoting the foreign carmakers to setup their manufacturing facilities in India. With the kind of reputation India holds, many companies have already made India the hub of their production operations.
They are also exporting their vehicles from India to various parts of the world. Cheap labour, high-quality raw materials and Foreign Direct Investment-promoting government are some of the factors that are attracting a lot of global auto giants to enter our market. This will benefit not only those automakers but also the Indian economy. Not to mention, this will generate a lot of employment opportunities for the local people. It is a win-win situation for everyone, especially in this era of globalization.
Tie-ups and co-operations among various countries and companies are the way forward. Sharing technology and manufacturing strength with one another will help to establish a sustainable and environment-friendly business for the future. With each passing Environmental Treaty, it is becoming essential to do business but with keeping the environmental goals in mind. For this, the co-operation of all the players is of paramount importance. No one country or company can achieve it alone.
Local Manufacturing for Companies in India
We have already established that India is the hub of automobile manufacturing. Companies like Maruti Suzuki, Hyundai , Tata, Mahindra, Kia, Renault, Honda, Toyota, Volkswagen, Skoda and a few more already have their production facilities here. The luxury brands like BMW, Audi and Mercedes-Benz also manufacture some of their products in India.
Some high-end-performance cars for these companies are either directly imported to our shores or assemble here. Some others like Volvo and Jaguar Land Rover have just the assembly units in India and the parts are imported from outside. Make in India aims to change that completely and have every car company manufacture its products here. Attracted by what India offers, many players are actually considering it as we speak.
Of course, the companies see the value of manufacturing in India and also setup a strong foundation for the export of their cars outside. In addition to that, India itself is an emerging market and one of the fastest-growing automobile markets in the world with a rapidly rising middle-class population. The companies also want a bite of the larger pie.
Hence, it makes sense for them to invest in India and setup their base here. Companies like Maruti Suzuki, Hyundai, Tata, Mahindra, Nissan, Renault, Honda already export from India to regions of the Middle East, South East Asia, Africa, Australia and parts of Europe.
With everything set in place, it is only a matter of time before all the other companies begin to start manufacturing in India boosting the Indian economy and enlarging the Indian automobile industry substantially. The recent big news announced by Nitin Gadkari, The Union Road, Transport and Highway Minister, was the arrival of Tesla in India in 2021.
That is surely the future of mobility. Electric cars are here to stay and the American auto giant willing to enter our market promises massive and rapid development in this sector. Depending on the demand, Tesla might also consider setting up its manufacturing plant in India. With initiatives like Make in India, we are excited about the prospects that India will get exposed to in the times to come in the field of automobile industry.