Investment in Automobile Industry in India

The Indian auto industry is one of the largest in the world, accounting for a significant amount in the total GDP of the country. India is a prominent name amongst heavy truck and tractor manufacturers. 100 percent Foreign Direct Investment (FDI) in auto components and the automobile sector is allowed under the automatic route.

The automobile industry of India, although advanced, has tremendous scope for development. Therefore, the government is looking for investment in the automobile industry in India. Foreign investment will bring new opportunities and possibilities in the sector. The basic advantage of FDI in automobile in Tamil Nadu, Manipur and other states is the inflow of capital in the sector. FDI will bring with it technological progress, which will directly lead to economic development. A foreign investment in India will stimulate industrialization, leading to more job opportunities.


Industry Scenario

Expected to grow to 135 bn by 2020 and 300 bn by 2026 at a CAGR 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.

Exports in the Sub-sectors of Passenger Vehicles and Commercial Vehicles, growing rapidly at the rate of 16.2% and 5% respectively.


  • 1
    World's largest tractor manufacturer
  • 2
    World’s second largest two-wheeler market
  • 3
    World’s third largest heavy truck manufacturer



The entry route is automatic for the following activities under the agriculture and animal husbandry sector:

  1. June 2017 - Chinese car maker SAIC to commence India operations in 2019.
  2. April 2017 - Kia Motors to set up a USD 1 bn car plant in Andhra Pradesh
  3. January 2017 - Peugeot to enter India by 2020 in JV with CK Birla Group
  4. November 2016 - Ford to invest USD 195 mn on new technology facility in Chennai.

FDI Facts

82% Jump in FDI from 2014 - 2016

18.4bn Sectoral investments (in USD) for automobile industry from April 2000 - December 2017

5.0% Share of total FDI inflows.