Indian automotive industry will prove to be an engine of economic growth for the country, Arun Goel, Secretary, Ministry of Heavy Industries, has said.
Addressing the Special Plenary Session – Building the Nation, Responsibly, at the 62nd SIAM Annual Convention, Goel noted that during the past decade, every nation that has become a developed nation has seen a certain sequence which starts with the success of the auto sector, leading to success in the capital goods sector, eventually leading to success in defence and then to aerospace.
Today in terms of numbers, the Indian auto industry is number one in two-wheelers, three-wheelers and tractors and number four in the passenger car segment and seventh in commercial vehicles around the world; however, the industry ranks 11th in terms of value, he emphasised.
The one-day convention saw top dignitaries from across the sector representing private and public space. Interestingly, every dignitary subscribed to the fact that the auto industry will become the torch bearer for India's growth story.
Indian Auto is less than 2% of the global trade with exports of $12 billion as compared to $272 billion of Germany, $113 of Japan while smaller countries are also above India with Hungary sitting at exports of $13 billion, Poland with $15 billion and Turkey and Thailand at $21 billion and $20 billion respectively.
The Secretary noted that although the Indian auto industry is moving towards achieving net zero emissions through various fuel types, including EV, hydrogen and ethanol, it has to also focused on advanced technologies to make India the global hub for automobiles.
According to statistics presented by him, the advanced automotive technologies in Indian auto comprise 3% in value terms while globally, it is 18% currently, and is expected to rise to 30% by 2030. Moreover, it is expected that by 2030, 45% of the vehicle cost shall come from advanced automotive technologies, Goel stated.
Opportunities Lying Ahead
As per published reports, India currently has a car density of 27 per 1,000 people, while China and the USA have 273 and 837, respectively. It is estimated that by 2030, passenger transport is likely to go up by 30% and freight transport by 50%, the secretary said.
Meanwhile, with the current share of vehicles in India, the country emits 274 million tonne of carbon dioxide, which is likely to go up to 1,164 million tonne by 2050. This will also increase India’s global emissions share from 13.2% to 19%.
To refrain India from achieving this milestone and to reach the target of net zero emissions by 2070, the Government is taking several steps to aid the Indian auto industry in reducing its emissions as road transport emits 90% of the total air pollution, Goel added.
“In the PLA for auto against our estimates of INR 42,500 crore of investment, we have got committed investment of about INR 67,700 crore,” he noted.
Meanwhile, in terms of PLI ACC, against the target of 50 gigawatts, the Government is expecting 98 gigawatts to be installed by 2025 and 163 gigawatts by 2030, which is likely to bring in an investment of INR 88,000 crore.
Besides the supply side, on the demand aspect, the Government has come up with several schemes like FAME I and II in the EV segment. The secretary noted that as a result of the FAME II policy, the sales of e2Ws have gone up by 10% as compared to June’21.
Similarly, the Government has also changed the e-buses policies, which have helped to reduce the quotations of the zero-emission busses by up to 27% lower than the diesel buses and 23% lower than the CNG.
“In case of PLI auto, the payout is as high as 18% for zero-emission vehicles. For PLI ACC, we are meeting about 20% of the sale value of the battery. And in FAME, we are paying from 20% to 40% of the upfront cost,” the secretary noted. Combining everything will be a complete package for the auto industry.
By setting the target of making India the global hub for the auto sector, he addressed the convention that with these investments, which are channelised in particular sectors, the industry will be able to achieve economies of scale with quality product manufacturing.
With the Government working on its part to act as a catalyst, Goel is hopeful that from the current size of $123 billion of the Indian auto industry, it will grow to $2 trillion by 2047, with the global share increasing from the current 2% to 7% in the said period.
Speaking at the event, Sumita Dawra, Additional Secretary, Department for Promotion of Industry & Internal Trade, Ministry of Commerce and Industry, Government of India, said, “Our country is making great strides in every segment including automobile sector. As manufacturing is the backbone of the economy, we are constantly working to improve our ease of doing business by removing or integrating the approval and compliance requirements. PLI scheme by the Government is providing the necessary support to the automobile sectors to grow swiftly.”
Kenichi Ayukawa, President SIAM and Executive Vice Chairman, Maruti Suzuki India, made the concluding remarks.
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