India to Global Auto Hub by 2020

Published Date : Aug 25, 2014

Global automobile manufacturers are eyeing India as a lucrative option to set up businesses. This shift in perception is due to country’s growing domestic market and its growth potential. The automakers will also focus on exports from India.

Report published by Standard Chartered Bank states, for global operations Hyundai will source its engines from India; Ford will manufacture engines in India for its Asia-Pacific and Africa region; and Volkswagen will increase its sourcing from India to a 70%. These developments in the automobile manufacturing sector are in addition to Suzuki and Toyota also sourcing from India for their global operations.

Presently, the total auto exports from Thailand are valued at $24 billion, while that of India are at $12 billion. However, the report forecasts, India will hold a bigger auto-export market share than Thailand by 2020. 

The rise in India automobile sector is attributable to its own maker Bajaj Auto. The two-wheeler manufacturer accounts for 60% of the country’s two-wheeler exports.

India is stands third after China and Japan in terms of two-wheeler experts. However, analysts predict the country will climb up the market share ladder leaving its counterparts behind as the latter are struggling with quality issues and increasing labor costs.

The impetus manufacturing industry is receiving under the tutelage of Narendra Modi’s government, it is also likely to help the auto industry.

Global companies’ interest in India is fueled by increasing domestic market and minimum transit time India offers for exporting vehicles to Europe, which is the biggest export market for small cars.  India also offers a good edge over other countries with engineering and design talent. This aspect is truly revered by most global companies.