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Investment in Automobile Industry in India

The Indian auto industry became the 4th largest in the world with sales increasing 9.5% year-on-year to 4.02 million units (excluding two wheelers) in 2017. If you are looking for investment in the automobile industry in India, know that the sector was the 7th largest manufacturer of commercial vehicles in 2017. India holds a strong position in the international heavy vehicles arena as it is the largest tractor manufacturer, 2nd largest bus manufacturer and 3rd largest heavy trucks manufacturer in the world.

With FDI policy for automobile sector allowing 100% FDI under the automatic route, FDI equity inflows in Automobile industry amounted to $17.9 bn FDI between April 2000 and September 2017; contributing towards 5% of the total FDI inflows. FDI in automobile industry will bring with it technological progress, which will directly lead to economic development. Foreign direct investment in Indian automobile industry  will stimulate industrialization, leading to more job opportunities.


  • 1

    World’s largest tractor manufacturer and 2nd largest bus manufacturer

  • 2

    World’s largest producer of BT Cotton

  • 3

    World’s 2nd highest number of USFDA approved plants

Currently valued at $75 bn, the automobile industry is estimated to touch the coveted $300 bn mark by 2026

With a $135 bn revenue industry expectation by 2020, the automobile segment can reach $300 bn by 2026 at a CAGR (Compound Annual Growth Rate) of 15%

India's rapidly growing 5 auto hubs have a significant potential to be used as a base for export to SEA and MENA regions

29.07 mn vehicles were manufactured in the country in FY18. During April 2018-January 2019, automobile production increased 9.84% year-on-year to reach 26.26 million vehicle units

The sub-sectors contribution to the overall market in 2017-18 is as follows:

  • Two-Wheeler: 81%
  • Passenger Vehicles: 13%
  • Three-Wheeler: 3%
  • Commercial Vehicles: 3%

  • Growing income

    3X increase in average household income from $ 6,3
  • Youngest Nation by 2025

    India to become the youngest nation by 2025 with a
  • Vehicle penetration

    Currently valued at $75 bn, the automobile industr
  • Expanding R&D hub

    India accounts for 40% of total $ 31 bn of global
  1. May 2019: Maruti Suzuki India has invested Rs.4 crores to establish a Center of Excellence at ITI, Becharaji, Gujarat to provide technical skill development to the students. Spread over 11,800 ft2, the centre is equipped with Maruti Suzuki Basic Training lab, Safety Simulation hop, and Finishing schools for Weld shop among other workshops and has a capacity for 150 trainees.
  2. April 2019: Ashok Leyland has planned a capital expenditure of Rs.1,000 crores to launch 20-25 new models across various commercial vehicle categories in 2018-19.
  3. Mar 2019: Hyundai Motors Company and KIA Motors Corporation plan on investing $300 mn in taxi service giant Ola, to build unique fleet and mobility solutions as well as building India specific EV and infrastructure.
  4. Nov 2018: Mahindra Electric Mobility opened its electric technology manufacturing hub set up with an investment of Rs.100 crores in Bangalore, which will increase its annual manufacturing capacity to 25,000 units.
  5. Oct 2018: Honda Motors Company is planning to set up its 3rd factory in India for launching hybrid and electric vehicles at a cost of Rs.9,200 crores.
  6. Sep 2018: Mercedes Benz has increased the manufacturing capacity of its Chakan Plant to 20,000 units per year, highest for any luxury car manufacturing in India.

  • 21.4% Jump in FDI in Automobile in Tamil Nadu, Manipur and other states from 2014-2016
  • 8.95% Share in Total FDI flows
  • $82 bn Total FDI inflows during April 2014 – March 2018
  • $5.1 bn Investments in the Automobile Industry from April 2000 to March 2019

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