The Make in India initiative has played a crucial role in transforming the country’s automobile industry. Launched in 2014, this initiative has significantly boosted domestic car production and electric vehicle manufacturing. Over the past decade, government policies, financial incentives, and infrastructure development have positioned India as a key global automotive hub. The sector has attracted substantial foreign investments, encouraged innovation, and increased local manufacturing, contributing to economic growth and sustainability.
India’s automobile sector has grown remarkably over the years. The industry started its transformation in 1991 when the sector was de-licensed and allowed 100 percent foreign direct investment. Since then, major global companies have set up manufacturing units in India. Vehicle production has increased from 2 million units in 1991-92 to nearly 28 million in 2023-24. The turnover of the Indian automotive industry has reached approximately USD 240 billion, making it a major contributor to the economy. According to the Ministry of Heavy Industries’ Annual Report for 2024-25, the industry supports around 30 million jobs, including 4.2 million direct and 26.5 million indirect jobs. In addition to domestic sales, India exported vehicles and auto components worth approximately USD 35 billion in FY 2023-24. India is now the world’s largest manufacturer of three-wheelers, among the top two in two-wheeler production, in the top four for passenger vehicles, and in the top five for commercial vehicles.
The auto component industry is a vital part of India’s manufacturing sector. It supplies essential parts to domestic vehicle manufacturers and exports to global markets. The sector includes engine parts, transmission systems, braking systems, electrical and electronic components, body parts, and more. India has become a preferred destination for auto component manufacturing due to its cost competitiveness, skilled workforce, and policy support. The sector contributes 2.3% to India’s GDP and employs 1.5 million people directly. In FY24, the industry’s turnover reached ₹6.14 lakh crore (USD 74.1 billion), with domestic supplies accounting for 54% and exports contributing 18%. The sector has maintained a growth rate of 8.63% over the past eight years. In FY24, exports were valued at USD 21.2 billion and are projected to reach USD 30 billion by 2026.
India’s automobile sector has also witnessed an increase in foreign investments. The industry has attracted USD 36 billion in foreign direct investment over the past four years. Global automotive companies are making significant commitments to expand their presence in India. Hyundai has announced an expansion worth USD 4 billion, while Mercedes-Benz has committed USD 360 million. Toyota recently announced an investment of USD 2.3 billion to increase its production capacity in the country. The expansion of these companies highlights India’s growing prominence in the global automobile industry.
Electric vehicle manufacturing has gained momentum in India, with 4.4 million EVs registered as of August 2024. In the first eight months of 2024 alone, 9.5 lakh electric vehicles were registered, bringing EV market penetration to 6.6%. To support this growth, the government has introduced policies such as the Production Linked Incentive Scheme for Advanced Chemistry Cell battery storage. The 2024-25 budget allocated ₹2,671.33 crore under the FAME scheme, which promotes the adoption of electric mobility. Additionally, the government has exempted customs duties on the import of critical minerals for EV battery manufacturing. In March 2024, the Electric Mobility Promotion Scheme was launched with an allocation of ₹500 crore for four months, supporting two- and three-wheeler segments.
The discovery of lithium deposits in Jammu and Kashmir has further strengthened India’s position in the global EV battery market. The Indian EV sector is expected to grow significantly and reach USD 113.99 billion by 2029. Government initiatives such as the Faster Adoption and Manufacturing of Electric Vehicles in India Scheme Phase-II have played a key role in boosting EV adoption. This scheme, implemented with a budget of ₹11,500 crore, provides incentives for two-wheelers, three-wheelers, four-wheelers, buses, and EV charging stations. The government has also sanctioned 2,636 charging stations across 62 cities in 24 states and union territories under this scheme.
Other schemes, such as the Production Linked Incentive Scheme for the automobile and auto component industry, aim to strengthen India’s manufacturing capabilities in advanced automotive technology. This scheme, with a budgetary allocation of ₹25,938 crore, provides incentives for electric vehicles, hydrogen fuel-cell components, and advanced automotive technology products. Additionally, the PLI Scheme for Advanced Chemistry Cell, with an allocation of ₹18,100 crore, focuses on creating a domestic manufacturing ecosystem for battery production. The PM E-DRIVE scheme, launched in September 2024, aims to support electric vehicle manufacturing with an outlay of ₹10,900 crore. The PM e-Bus Sewa scheme, with an allocation of ₹3,435.33 crore, seeks to deploy over 38,000 electric buses across the country.
Other government measures have also contributed to the growth of electric mobility. The Ministry of Power introduced revised guidelines in September 2024 to create a standardized and interoperable EV charging infrastructure. The Ministry of Finance has reduced the Goods and Services Tax (GST) on electric vehicles from 12% to 5%, making EVs more affordable. The Ministry of Road Transport and Highways has also announced that battery-operated vehicles will be given green license plates and will be exempt from permit requirements. Additionally, the Ministry of Housing and Urban Affairs has amended building regulations to include charging stations in private and commercial buildings.
The Make in India initiative has played a key role in boosting the automobile sector, increasing domestic vehicle production, and accelerating EV adoption. With strong policy support, rising investments, and advancements in technology, India is on track to becoming a global leader in automotive and electric mobility. The government’s continued focus on self-reliance in the automotive sector is expected to drive further growth and innovation in the industry.
