Automobile and auto-component manufacturing play a significant role in India’s economy because of their contribution to overall GDP, employment and export revenues. The sector contributes a little over 7% to the GDP of the country, provides direct and indirect employment to at least 19 million people and constitutes around 5% of the total export revenue from goods. The country ranks 6th globally in the production of vehicles.
India’s domestic production of vehicles grew 5.41% to 25.31 million in 2016-17 from the previous year. These vehicles include passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle. Export of passenger vehicles and commercial vehicles grew 16.20% and 4.99% respectively, during 2016-17.
India’s auto-components sector comprise six product segments viz. engine parts, drive transmission and steering parts, body and chassis, suspension and braking parts, equipments, electrical parts and others. In 2015-16, India exported Rs 709 billion worth of auto-components, while it imported Rs 906 billion worth of auto-components.
Domestic sale of vehicles is estimated to be 3.85 million units during 2016-17 and this is almost 6% higher than last year. Of this, two wheelers constitute 69%, passenger vehicles 19%, three wheelers 10% and commercial vehicles 3%.
The turnover of auto-component industry is estimated to be Rs 2,556 billion in 2015-16. Of this, 31% constitute engine parts and 19% constitute drive transmission and steering parts, while other components make up the balance revenue.
Government of India allows 100% foreign direct investment (FDI) under automatic route in this industry. The industry (automobile and auto-components) received around USD 16.51 billion of FDI cumulatively between April 2000 and December 2016.