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Reinventing the wheel: The constant transformation of India’s auto sector

India is a rapidly industrialising economy, with an ever-growing need for a robust transportation network to link its various metros and rural areas. Responsible for 50% of the nation's manufacturing GDP, the Indian auto sector is backed by its strong forward and backward linkages with many critical segments of the economy.

For long, the Indian automobile industry, buoyed by an expansion in the economy, has been considered to be a key growth driver. The Indian auto sector is a world-renowned force too, with major exports made to not only nations in the subcontinent and the various developing nations, but to the developed markets of the US and Europe. Despite a sluggish market environment, in April-March 2019, overall automobile exports grew by 14.50%, reports SIAM.

On the other hand, the auto component industry in India, with a strong positive multiplier effect, is considered to be one of the key components of India’s economic growth. Despite a sluggish domestic demand, the segment's exports grew by 17.1% to $15.16 billion in 2018-19 from $13.50 billion in 2017-18, registering a CAGR of 11 % over a period of six-year, states ACMA. This healthy performance is certainly a testimony of the sector’s growing recognition globally, highlighting that the segment does meet the stringent global norms and standards.

India is today the fourth largest automotive market in the world and the players in the manufacturing value-chain reflect the strides it has taken. When the Indian automotive market opened up after liberalization in the early 1990s, the global automakers set base in the country in both two and four wheelers. Slowly and steadily as the localization needs of these OEMs (original equipment manufacturers) grew, a strong auto component manufacturing base started to take shape. The auto component make ..