Description

NITI Aayog has recently released a significant report titled “Automotive Industry Powering India’s Participation in Global Value Chains”, which analyzes the current status of India’s automotive industry and outlines a roadmap to amplify its global footprint.

Global And Domestic Automotive Overview

As of 2023, global vehicle production stood at approximately 94 million units, with the auto components industry valued at USD 2 trillion. India holds the position of the fourth-largest vehicle manufacturer in the world, producing close to 6 million vehicles annually. The country excels in manufacturing small cars and utility vehicles and benefits from government initiatives like ‘Make in India’, which enhance its competitiveness in both domestic and export markets.

Transformational Trends In Auto Industry

The global auto sector is witnessing a paradigm shift towards electric mobility, driven by environmental concerns and stringent emission regulations. Sales of electric vehicles (EVs) are on the rise, and regions such as Europe and the U.S. are becoming hubs for battery manufacturing. This trend is boosting demand for resources like lithium and cobalt, opening up new investment avenues. At the same time, the advent of Industry 4.0—involving artificial intelligence, machine learning, IoT, and robotics is redefining production lines, making them more efficient and adaptive.

Hurdles In India’s Automotive Growth

Despite being a global leader in vehicle manufacturing, India's share in the global auto components trade remains limited to just 3%, with an export value of around $20 billion. Major challenges include:

• High production and logistics costs

• Gaps in infrastructure

• Weak integration with global value chains

• Limited investment in research and development

• Low presence in high-precision components

Strategic Recommendations By NITI Aayog

To strengthen India's competitiveness, the report recommends both fiscal and non-fiscal measures:

Fiscal Measures:

• Operational expenditure support to help scale up manufacturing

• Workforce training and skill development

• Financial incentives for R&D and international branding

• Development of industry clusters for collective growth

Non-Fiscal Measures:

• Encouraging adoption of Industry 4.0 technologies

• Fostering international partnerships and trade agreements

• Regulatory simplification to improve the business environment

Vision For Future: Target 2030

NITI Aayog sets an ambitious vision for 2030:

• Component production to reach $145 billion

• Exports to grow from $20 billion to $60 billion

• India’s share in global value chains to increase from 3% to 8%

• Generate between 2 to 2.5 million new jobs, expanding the sector’s workforce to nearly 4 million

This forward-looking plan aims not just at economic expansion but also at building a sustainable and globally integrated automotive ecosystem for India.

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