India Does India Become the New Manufacturing Hub for Automobiles?
India is emerging as the new hotspot destination in Asia for automobile companies to set up their manufacturing plants. With the assistance of strong government initiatives and business plans, the Indian manufacturing sector seems to be on the right track.
India aims to produce 13 million passenger vehicles, 3.9 million commercial vehicles and 55 million two wheelers by 2026 under the Indian Government’s Automotive Mission Plan 2016-26. The country has already overtaken China to become the world’s biggest two wheeler market and is also expected to take a lead in four wheelers by 2020. Nirmal K Minda, President, Automotive Component Manufacturers Association of India (ACMA) at a recent machine tool event in Bengaluru said, “Over the years, the automotive industry in India has witnessed steady growth and today the industry is the fifth largest auto industry in the world and will soon be positioned at No 3.” The Indian automotive market scenario has opened up enormous opportunities for domestic and global automobile manufacturers.
India: A Manufacturing Hub
The Indian Government’s ‘Make in India’ initiative seems to be picking up pace as some of the leading automotive manufacturers across the globe are heavily investing in the region. For instance, the German automotive company Volkswagen has recently announced plans to invest around 1 billion euros in the country over the next few years to develop six new models. By 2021, South Korea’s second-largest automobile manufacturer, Kia Motors also intends to increase investments in the region to 2 billion dollars from the present 1.1 billion dollars. Lately, Suzuki Motor Corp has also announced investments of about 3 billion dollars over the next three years to maintain its position in the Indian passenger vehicle market.
Indian companies such as Tata Motors are not far behind. In 2017, Tata Motors revealed that it has pegged a total investment of 610 million dollars (Rs 4,000 crore) which will include an investment of 230 million dollars (Rs 1,500 crore) in the commercial vehicle business while another 380 million dollars (Rs 2,500 crore) will be used for development of passenger vehicle business. With this, the company intends to become the third largest commercial vehicle manufacturer in the world and third largest in passenger vehicle space in the local market by 2019.
If we look at the two wheeler market, Honda inaugurated its fourth assemble line in its Karnataka plant last year which increased its production capacity to 2.4 million units, this made it the company’s biggest plant in the world for two wheelers. Hero MotoCorp had also announced investments worth 380 million dollars (Rs 2,500 crore) in the next two years.
The Export Rate Is Rising
The Indian market is slowly emerging as the next most popular manufacturing market in Asia after China. The country has also emerged as an auto export hub for both small as well as heavy vehicles. According to the ‘Make in India’ website, major auto behemoths have set up shop in the country such as Renault which exports its ‘Kwid’ cars to Mauritius, Suzuki’s Baleno to Japan, Honda’s Jazz to South Africa and Volkswagen’s Vento to Mexico.
Growth Opportunity For the Machine Tool Industries
This has also opened opportunities for the auto ancillary industries, Minda explains, “The automotive mission plan 2016-26 would result into the auto component industry growing five times its current size of 40 billion to 200 billion by 2026. This also represents a significant growth opportunity for machine tool industries.” This means that growth of the Indian automotive industry will subsequently lead to growth of the auto ancillary industries along with the machine tool industry.
Thus, ensuring a win-win situation for everyone!
- Indian automotive industry is fifth largest in the world
- Biggest two wheeler market across the globe
- By 2026, India expected to be third largest automotive market by volume
- 100% Foreign Direct investment (FDI) is allowed under the automatic route in the auto sector, subject to all the applicable regulations and laws.
- Presence of four large auto manufacturing hubs across the country: 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.
This article was first published by MaschinenMarkt International.