India is on a path of becoming an industrial powerhouse. With the three Ds i.e. Democracy, Demography and Demand the industrial sector is growing by leaps and bounds in India. This has resulted in better spending capacities and better standard of living for the common masses. One of the major causes as well as effect of to this growth story has been the Automobile Sector. Overview of the automobile sector shows that all the segments i.e. commercial vehicles, passenger vehicles, two wheeler and three wheeler segment show a considerable rise.
Growth of the Automobile sector in India has been a phenomenal in the recent years. Indian automobile industry is currently one of the largest in the world, becoming the 3rd largest in 2016. It contributes around 7% to the Indian GDP with around 45% to the manufacturing GDP. With such exponential growth, India has become the Automobile Hub of the Asia-Pacific exports. Cheap labour, frugal engineering practices, technological advances and demand of the Indian market due to rising disposable income has fueled the growth of the Automobile sector. The sector will only grow from here as the market penetration increases and more and more players come in to play.
The future of automobile sector in India looks very promising. Indian car market has the potential to grow to 6 million plus units annually by 2020. With heavy investment in R&D by government players like NATRiP and private players like Maruti-Suzuki, Hyundai and GM not only has the cost of manufacturing has reduced but also new variants are being introduced on a large scale. With various government schemes like Make In India, the automobile sector is further going to get a boost. New variants in product like electric cars and brands like Volkswagon etc. are adding to the market share increasing production and employment.
FDI in automobile sector is also on the rise as the sector turns lucrative. New players like MV Augusta, Sweden based Clean Motion, Chrysler motorcycles etc. have opened shop in India. Many existing players are also making heavy investment. Eg- Honda Motorcycles has opened the world’s largest scooter plant in Gujarat. GM Motors plans to invest $1 billion in India by 2020. Such examples are just the tip of the iceberg in terms of automobile companies flocking the Indian market across the country.
Consequently, jobs in the automobile sector are also on the rise. Jobs are being created in the design, manufacturing and sales and service stage of the industry. Many low level jobs like service technicians, body shop repair works as well as high level jobs like designers etc. are being created in the automobile and ancillary industry. It has been projected that by 2022, 19 million jobs (indirectly) and 15 million jobs (directly) will be added to the employment market by the automobile sector.
With stakes this high, it will be profitable not only for the automobile companies to setup base in India but also the general public who will have a source of livelihood. In return the economy will be boosted as we reap the demographic dividend.