India’s automotive industry is booming, making up a significant 7.1 percent of the nation’s GDP and 49 percent of total manufacturing output. It is already the fourth largest vehicle market in the world and by FY26, it is anticipated to move up to become third-largest regarding sales volume. Despite facing disruption during the pandemic, the industry has gradually bounced back. Following the United Nations Framework Convention on Climate Change (COP 27 Summit) in India, the automobile sector has undergone a rapid evolution. This shift resulted from India’s renewed focus on reducing its carbon emissions. Consequently, it experienced ebbs and flows at an incredibly fast rate.
One significant change in the industry is the rise of electric vehicles (EVs). While EVs have been around for over 150 years, it is in the past decade that they have become increasingly popular, particularly with the growing awareness of the impact of vehicle emissions on the environment. As a major contributor to air pollution in India, vehicle emissions contribute to 20-30 per cent of particulate matter at the breathing level of air quality. In addition, the transport sector is responsible for about 8% of Greenhouse Gas Emissions, with passenger vehicles accounting for about 45% of CO2. These alarming facts have led to a shift towards EVs among consumers, and the Indian government has set a target that by 2030, 30 per cent of all vehicles on Indian roads must be electric.
The government is heavily investing in the EV sector by introducing incentives to manufacturers and buyers. It is also launching schemes such as FAME India, which aim to promote the faster adoption of hybrid and electric vehicles. Despite the need for further improvement in EV infrastructure, the registration of EVs has almost doubled in 2022 compared to 2021, with a 68 per cent increase in EV adoption between April and June 2022.
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With the ever-growing purchasing power of consumers, car rental and shared mobility services have seen a significant increase in popularity. This shift in behaviour results from a change in their fundamental ideology of outright ownership of cars. Owning a car comes with additional costs and restricted portability, and the pandemic has made people apprehensive about public transportation. The car rental segment is expected to generate a revenue of USD 2.63 billion in 2023, offering customers the luxury and convenience of owning a car without any long-term obligations. Moreover, these cars come with advanced features like keyless entry systems and safety mechanisms.
Technology has become a major part of the mobility industry, as connected mobility is experiencing a surge in popularity. Companies are utilizing AI, blockchain, IoT, and 5G to provide tailored services and raise safety standards.
In conclusion, the Indian automobile industry has undergone significant changes in recent years, responding to the growing awareness of the impact of vehicle emissions on the environment and the evolving needs and expectations of consumers. The government is actively promoting EVs and car rental/shared mobility services, while industry players are integrating technology to provide customized services and enhance safety features. The future of the industry looks promising, with further policy reforms and infrastructure improvements expected to contribute to its continued growth.
