Make in India: Transforming India’s Automotive Landscape

Context:

Launched in 2014, the Make in India initiative has catalyzed a remarkable transformation in India’s automobile and auto component sectors. By fostering domestic production, promoting electric vehicle (EV) manufacturing, and attracting global investments, this policy has positioned India as an emerging leader in the global automotive industry, contributing significantly to economic growth, employment, and sustainability goals as of March 25, 2025.

Key Information Points:

• Initiative Launch: Make in India, introduced in 2014, aims to boost domestic manufacturing, with a significant impact on the automobile sector.
• Economic Contribution: The automobile sector contributes approximately 6% to India’s GDP, while the auto component sector adds 2.3%.
• Industry Turnover: The automotive industry recorded a turnover of USD 240 billion (Rs. 20 lakh crore), and the auto component sector reached Rs. 6.14 lakh crore (USD 74.1 billion) in FY24.
• Production Growth: Vehicle production rose from 2 million units in 1991-92 to 28 million in 2023-24, driven by post-1991 de-licensing and 100% FDI via the automatic route.
• Employment: The auto industry supports 30 million jobs (4.2 million direct, 26.5 million indirect), with the auto component sector employing 1.5 million directly.
• Export Performance: Automobile exports hit 4.5 million units in FY 2023-24; auto component exports reached USD 21.2 billion, projected to rise to USD 30 billion by 2026.
• FDI Inflows: USD 36 billion in foreign direct investment flowed into the sector over the past four years.
• Global Standing: India is the largest manufacturer of three-wheelers, among the top two for two-wheelers, top four for passenger vehicles, and top five for commercial vehicles worldwide.
• Auto Component Sector Overview:
• • Supplies 54% to domestic OEMs and 18% to exports.
  • Grew at a CAGR of 8.63% from FY16 to FY24.
  • Achieved a trade surplus of USD 300 million in FY24.
  • Exports 25% of production annually, targeting USD 100 billion by 2030.
• Major Export Markets: Europe (USD 6.89 billion), North America (USD 6.19 billion), and Asia (USD 5.15 billion).
• Component Breakdown: Engine parts (26%), body/chassis (14%), suspension/braking (15%), transmission/steering (13%), electricals/electronics (11%).
• Investment Plans: USD 7 billion planned by FY28 to localize advanced components (e.g., electric motors, automatic transmissions), leveraging the “China Plus One” trend.
• Import Reduction: Auto component imports dropped by 5.8% over two years by 2023.
• Key Players’ Investments:
• • Hyundai: USD 4 billion (Rs. 33,200 crore) expansion.
  • Mercedes-Benz: USD 360 million (Rs. 3,000 crore).
  • Toyota: USD 2.3 billion (Rs. 20,000 crore) capacity increase.
• EV Growth:
• • 4.4 million EVs registered by August 2024 (9.5 lakh in Jan-Aug 2024), with 6.6% market penetration.
  • Annual EV production (in thousands):
  • • FY 2019-20: Passenger (3.50), Commercial (0.53), 3W (143.83), 2W (26.84).
    • FY 2020-21: Passenger (5.83), Commercial (0.41), 3W (91.97), 2W (44.83).
    • FY 2021-22: Passenger (22.36), Commercial (2.22), 3W (185.38), 2W (252.78).
    • FY 2022-23: Passenger (62.28), Commercial (3.11), 3W (404.88), 2W (728.21).
    • FY 2023-24: Passenger (92.17), Commercial (8.66), 3W (632.78), 2W (948.42).
• EV Market Projection: Expected growth to USD 113.99 billion by 2029.
• Government Schemes:
• • FAME Phase-II: Rs. 11,500 crore (2019-2024) for e-2W, e-3W, e-4W, e-buses, and 2,636 charging stations across 62 cities in 24 states/UTs.
  • PLI-Auto: Rs. 25,938 crore (2022-27) for Advanced Automotive Technology (AAT) products, requiring 50% Domestic Value Addition (DVA); incentives: 13%-18% for EVs/Hydrogen Fuel-Cell, 8%-13% for AAT components.
  • PLI-ACC: Rs. 18,100 crore to establish 50 GWh of Advanced Chemistry Cell (ACC) battery manufacturing.
  • PM E-DRIVE: Rs. 10,900 crore (2-year scheme from 2024) for e-2W, e-3W, e-Trucks, e-buses, e-Ambulances, and charging infrastructure.
  • PM e-Bus Sewa-PS spadM: Rs. 3,435.33 crore to deploy 38,000+ e-buses with payment security for operators.
  • SMEC: Launched March 2024, mandates Rs. 4,150 crore investment, 25% DVA by year 3, 50% by year 5 for electric passenger car manufacturing.
• Other Ministry Measures:
• • Ministry of Power: Issued “Guidelines for EV Charging Infrastructure-2024” on September 17, 2024, for interoperable charging networks.
  • Ministry of Finance: Reduced GST on EVs from 12% to 5%.
  • MoRTH: Green plates and permit exemptions for battery-operated vehicles.
  • Ministry of Housing: Amended building bye-laws to mandate charging stations in private/commercial buildings.
• Budget Support: Rs. 2,671.33 crore under FAME in 2024-25; customs duty exemptions on critical EV minerals.
• Lithium Discovery: Recent finds in Jammu & Kashmir bolster India’s battery manufacturing potential.
• EMPS: Rs. 500 crore scheme (March 2024, 4 months) targeting e-2W and e-3W adoption.
• Sustainability Focus: Policies promote electric mobility and advanced technologies for reduced emissions and self-reliance.
• Conclusion: Make in India has spurred growth, investment, and innovation, positioning India as a global automotive leader.

Key Terms:

• Make in India: 2014 initiative to enhance domestic manufacturing and attract FDI.
• Foreign Direct Investment (FDI): Investment from overseas entities into India’s economy.
• Electric Vehicles (EVs): Battery-powered vehicles reducing fossil fuel dependency.
• Production Linked Incentive (PLI): Scheme offering financial rewards for boosting local production.
• Advanced Automotive Technology (AAT): Cutting-edge vehicle technologies like EVs and hydrogen fuel cells.
• Domestic Value Addition (DVA): Percentage of a product’s value added domestically.
• Auto Components: Parts like engines and transmissions critical to vehicle manufacturing.
• China Plus One: Strategy to diversify manufacturing beyond China.
• FAME Scheme: Program to accelerate EV adoption and infrastructure development.
• GST Reduction: Tax cut from 12% to 5% to promote EV affordability.