How India's Auto Sector Becoming the Global Engine for Export Business?

20 May 2024

Have you ever wondered about India’s rising automobile exports, which once struggled in the shadows of the global industry? and how surged ahead to claim the title of the world’s 3rd largest auto market, surpassing even countries like Japan. India’s two key trends, affordability, and sustainability, are responsible factors for exponential growth. The first offers a high-quality affordable manufacturing opportunity for vehicle components, and the second is a sustainable supply chain network for lasting growth.

Delve deeper into India’s automotive industry insights and analyze the trade performance with, export genius, the world’s largest trade data platform.

India’s Rising Automobile Industry

Indian automobile exports have increased by 27.5% in the last five years from 2019 to 2023 whereas the import value increased by $2.5 billion.

Notably, from 2020 to 2023, India’s automobile export performance rose by 72%, this drastic improvement is attributed to factors implemented by the government to improve trade across borders, ease trade regulations, and attract foreign direct investment.

As per the reports, India received more than $25 billion in FDI for the automobile sector from 2015 to 2023. The highest ever FDI received during this period was in 2022, attracting between $6-7 billion.

 

***Value USD Billion

 

 

India’s Top Export Destinations

The Government, with various policies, is trying to expand its automobile industry across the continent as vehicle demand registered a growth year on year. The implementation of these efforts has helped India achieve double-digit growth.

A comparison of the top five countries for India’s export performance indicates the USA as the largest export destination with $2.7 billion, in 2023.  And in Asia, Bangladesh secured the 1^st place for Indian car exports with $706 million, in 2023.

India’s vehicle export performance shows sustained growth or a marginal decrease in trade value in 2023. Notably, car exports from India to Saudi Arabia increased by $800 million, in 2023, and from 2019 to 2023 export value increased by 185%, this indicates a strengthening of trade relations between India and Saudi Arabia.  

***Value USD Million

 

What Are Top Vehicle Components Export from India?

With the rise of vehicles exported from India to the world, the components used during the manufacturing process also took an upward growth trajectory. Let's delve deeper into this symbiotic relationship.

The export of tractors and motor accessories parts has become the most traded commodity with $7.6 billion in 2023, increasing from $5 billion in 2019. Motorcars and other vehicle components exports crossed $7.3 billion in 2023.

In the top five vehicle components exports, certain products declined in 2023 due to geo-political challenges, for instance, tractor components fell by $400 million in 2023, compared to 2022.

***Value USD Million

 

What Are the Measures Taken to Boost Auto Sectors By India

Production Link Incentive (PIL)Schemes –

To boost domestic production for the Automobile industry, the government has brought a plan to offer financial incentives and subsidies based on incremental growth. Under this PIL program, the government has allocated around $3-4 billion for five years.

FAME Scheme-

This was implemented in 2019 with a budgetary allocation of $1.3-1.5 billion to establish the domestic market for electric vehicles. To promote EVs and explore the exponential export potential.

Ease of Doing (EoD) Business –

The government has taken various initiatives to ease trade regulations and reduce the time to set up manufacturing units. The broader aim to improve the ease of doing business is to attract investment, improve ranking, etc.

Upgradation of BSVI Standards

It has become mandatory for all two-wheelers to switch to Bharat stage VI emission norms for two-wheelers to stand with global fuel efficiency standards. This makes two-wheelers exports attractive in the global market.

Trade Infrastructure for Export Scheme –

Under this scheme, the government of India aims to develop the export infrastructure facility by offering grants, and financial benefits to improve the logistics for vehicles export.

With the help of constructive economic and monetary policies, India has secured the global market share for the auto industry with its rising export performance. Now, it becomes crucial for India to frame electric vehicle infrastructure policies to promote domestic market share and attract foreign manufacturers to ensure lasting growth for businesses and the nation.