New Delhi

The Indian automotive sector has achieved a significant milestone, surpassing the INR 20 lakh crore mark in revenue for the fiscal year 2024, as announced by Vinod Aggarwal, President of the Society of Indian Automobile Manufacturers (SIAM), on Monday, September 9, 2024. This impressive figure translates to approximately USD 240 billion, highlighting the industry's substantial economic impact. The sector now accounts for 14-15 per cent of the total Goods and Services Tax (GST) collected in India, underscoring its pivotal role in the country's fiscal health.

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Aggarwal, speaking at the 64th annual session of the Automotive Component Manufacturers Association (ACMA), emphasized that the automotive industry's contribution extends beyond financial metrics. It plays a crucial role in generating both direct and indirect employment opportunities across the nation. Currently contributing around 6.8 per cent to India's Gross Domestic Product (GDP), Aggarwal expressed confidence that this percentage is set to increase in the coming years.

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The growth of the Indian automotive sector is not merely quantitative but also qualitative, with significant advancements in technology. On the global stage, India has solidified its position as a major player in the automotive market. It now ranks as the third-largest market for passenger vehicles, leads in two and three-wheeler sales, and holds the third position in the commercial vehicle segment. This progress aligns with India's vision of becoming a developed nation, or "Viksit Bharat," by 2047.

Looking ahead, Aggarwal projects even faster growth for the automotive industry, anticipating it to be a key driver of India's economic development. In a strategic move to reduce import dependence, the industry has identified 50 critical components for local production. This initiative is part of a broader effort to enhance indigenous manufacturing capabilities.

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SIAM, in collaboration with ACMA, has set ambitious targets for increasing localization. The industry committed to reducing import content from 60 per cent to 20 per cent by 2025, using the 2019-20 levels as a baseline. This effort aims to decrease imports by INR 20,000 to INR 25,000 crore over five years. Aggarwal reported that the first phase of this import reduction plan has been successfully achieved, with a 5.8 per cent decrease in the first two years.

The focus on local manufacturing extends to high-tech, critical components that have traditionally been imported. ACMA members are being encouraged to start producing these items in India, enabling vehicle Original Equipment Manufacturers (OEMs) to source them locally. Given that many of these components are electrical or electronic, there's a recognised need to develop specialized capabilities and capacities within India for these advanced items.

The Indian automotive industry is not only excelling in conventional internal combustion engine technologies but is also making strides in alternative power trains. It has developed strong capabilities in multiple areas, including CNG, electric vehicles, and hybrids.

The industry is actively working on hydrogen and fuel cell-based technologies, demonstrating its commitment to innovation and sustainability.

Aggarwal emphasised the industry's future focus on cleaner and safer vehicles, aligning with the country's growing aspirations. He also expressed gratitude to the Ministry of Heavy Industries for initiating the development of the third Automotive Mission Plan, which will cover the period from 2024 to 2047. This plan will outline the industry's growth trajectory in three distinct phases: from now to 2030, 2030 to 2037, and finally, 2037 to 2047.

The Automotive Mission Plan is expected to serve as a crucial guiding document for the entire automobile and auto component industry. It will assist in planning investments and act as a reference for various government ministries and state governments in formulating policies aligned with the auto sector's growth and research needs.

ACMA President Shradha Suri Marwah, also speaking at the session, highlighted some of the challenges facing the industry. These include addressing the skill gap and maintaining international quality standards. Marwah stressed the importance of collaboration with educational institutions and investment in skill development to overcome these challenges. She also emphasized the need for industry collaboration, particularly in light of the growing demand for electronic components and semiconductor chips.