“Come, make India your
workplace. This is the best time ever to be in India and it’s even better to
Make in India,” – Narendra Modi, India’s Prime Minister
For inspiration, people don’t need to look beyond the vast
automobile sector that caters to demands of both domestic and foreign buyers. Just
to illustrate,
Ford
India sold 21,520 vehicles in domestic wholesales and exports in August
2015, as compared to 14,092 vehicles in August 2014. Following the launch of Modi’s
Make in India campaign in September 2014, the Indian government has
consistently pursued its vision to promote the country’s automotive industry on a
global front. The automobile industry has greatly benefited from this campaign
as many international car players are now
investing heavily in India to set up production units that are big
enough to meet the rising demands of Indian and foreign markets alike.
Make in India: A huge
impetus to India’s Automobile Sector
As one of the world’s largest auto markets — with a yearly
sales of 19.9 million vehicles in 2015—India’s automobile industry is all set
to become the real force behind the government’s ‘Make in India’ initiative.
Despite a year in which their sales dwindled, many of the world’s largest
automobile companies have set up their manufacturing units in India due to its
vast size and availability of manpower.
In FY 2014-15, nearly 31% of small cars sold globally were
manufactured in India. The country’s auto market has the potential to grow to
six million plus units annually by 2020. As per the document titled Auto
Mission Plan (AMP) 2016-26, the commercial vehicle segment is expected to grow
at an average yearly pace of 7.5%
Source: ibef.org
India: A main export
hub
The government wants to turn the automobile industry into
the ‘mother of all manufacturing activities’ by making it the engine of
Narendra Modi’s ‘Make in India’ initiative. Recently, Volvo launched ‘DC
Avanti’, its first indigenous sports car in India. Also, it unveiled its 8400 hybrid
city bus in the country with Navi Mumbai being the first city to have such
buses. As several international automobile makers have started investing funds
in different segments of the industry, these trends are only bound to rise in
the future.
For the first time in its history, Maruti Suzuki has decided
to export its new Made-in India ‘Maruti Suzuki Baleno’ to Japan, which is the native
country of its parent company Suzuki. It clearly indicates that the company is
planning to make India its new export hub. Another car maker that has taken
Make in India initiative seriously is Volkswagen AG, one of the largest car
makers in Europe.The company unveiled its made-for-India ‘Sedan Ameo’, at
recently concluded Make in India event in February.
Source: Livemint.com
The exports of utility vehicles, cars, commercial vehicles
and two-wheelers have increased every year since 2000. According to data
released by Department of Industrial Policy and Promotion (DIPP), the automobile sector
has attracted foreign direct investment (FDI) worth US$ 14.32 billion during
April 2000 to December 2015. Both domestic and foreign car makers have made
investments of nearly Rs 60,000 crore over the last few years. Some of the key
investments and developments in the automobile sector are:
Source: The Economic Times
India continues to be a major exporter of Maruti Suzuki
branded cars. Other manufacturers have also made India their main manufacturing
centers for exports. Based in Seoul, South Korea, Kia Motors, a subsidiary of
Hyundai, is all set to build a factory in India. Also, China’s largest truck
maker, BeiqiFoton will manufacture and sell passenger vehicles in India under a
German brand. While passenger car makers, like Hyundai and Maruti Suzuki, have
already started exporting small cars from India to Europe, heavy-duty
commercial manufacturers have just started considering this thought.
Some of the foreign car makers present in India are:
Name of the Car Maker
|
Native Country
|
Suzuki
|
Japan
|
Nissan
|
Japan
|
Piaggio
|
Italy
|
Volkswagen
|
Germany
|
Renault
|
France
|
Hyundai
|
South Korea
|
General Motors
|
USA
|
BMW
|
Germany
|
Ford
|
USA
|
Toyota
|
Japan
|
Over the years, car exports from India have reached to a
level of around six lakh units annually. Even luxury car makers have increased
the use of indigenous components and expertise. Last year, BMW had achieved 50%
localization across all its eight car models sold in the country. Further,
Mercedes-Benz declared that its C220CDI has a localization level of 60%.
Initiatives taken by
Indian government
The Government of India has taken some initiatives to
bolster foreign investment in the automobile sector. The ‘Automotive Mission
Plan (AMP): 2006-16” has been prepared to make India a thriving automobile hub.
Here are some of the initiatives taken by the government:
- 100% foreign direct investment (FDI) is allowed in
the automobile segment
- Manufacturing and imports in the automobile
sector are free from license and approvals
- The government has launched a NMEM 2020 in 2013
to make India a 100% electric vehicle nation by 2030
A road ahead
India is on the threshold of major reforms and developments
and is poised to become the world’s third-largest economy by 2030. As per the
Automotive Mission Plan 2016-26, the automobile sector is likely to produce up
to $300 billion annual revenue by 2026, contributing more than 12% to the
country’s gross domestic product and generating over 65 million jobs.

Welcoming
Narendra Modi’s ‘Make in India’ campaign, many automakers have ramped up their
production in the country. Some global automakers have either started operating
their factories round the clock or are in the process of increasing their shift
timings to meet rising export demands in a resounding endorsement of the
government’s call to ‘Make in India’ campaign.For instance, Ford Motor’s
manufacturing unit in Tamil Nadu is working in three shifts a day. Similarly, Europe’s
largest car maker, Volkswagen is all set to start its third shift. Both
domestic and international auto makers have committed to invest billions of
dollars in the country, enticed by opportunities offered by local markets as
well as its manufacturing capabilities.
Source: ET Auto.com
The Bottom Line
With India’s doors open to foreign car manufacturers, the
auto industry is bound to see a host of radical changes over the next few
years. Further, growth in the automobile sector will create more job
opportunities for people associated with this industry. Also, with an increase
in the production and sale of cars, there will be a need of new
car
insurance policies to protect vehicles from all perils. As it is mandatory
by Indian law to have a third-party insurance to ply your vehicle on roads,
car
insurance companies are expecting a surge in their business revenue.
Overall, Modi’s Make in India campaign is a win-win
situation for both consumers and companies. The country has already become the
largest manufacturer of motorcycles and the second-largest two-wheeler
manufacturer in the world, and as a result, the plan of India’s automobile
sector to reach 7 million vehicles milestone by 2020 is no longer a far-fetched
idea but rather an achievable reality.
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