India aims to boost its automotive industry by $400 billion by 2035, targeting a $600 billion market value. Arthur D Little’s report underscores using India as a China-plus-one option, emphasizing electric vehicle and software manufacturing. This push for manufacturing excellence positions India to compete with global automotive hubs. Amid industry disruptions, Indian companies could emerge as leaders, propelled by a strong domestic market.
India’s automotive industry, currently valued at $250 billion, is on a trajectory to reach $600 billion by 2035. The strategic vision involves positioning India as a formidable global competitor, eyeing the status of a $1 trillion export powerhouse through a systematic enhancement of global competitiveness. A pivotal component of this strategy is positioning India as a viable China-plus-one alternative. The focus is on becoming a global hub for manufacturing electric vehicles and establishing dominance in automotive software research and development, aligned with the global industry’s China-plus-one policy.
According to Barnik Maitra, Managing Partner for South Asia and India at Arthur D Little, “In light of recent safety and emission regulations, the gap between India’s automotive industry and developed economies is closing. Several Indian OEMs, including Mahindra & Mahindra, Tata Motors, and Ola Electric, are aspiring to become global players. Drawing parallels to industry pioneers like Tesla and BYD, I anticipate that by 2035, 2-3 Indian firms will have successfully achieved similar global recognition in the realm of electric vehicles.”
However, despite India’s prominence as a China-plus-one alternative, it contends with robust global competition for capital, particularly from the dynamically transforming industries in the Middle East. The automotive sector emerges as a prime target, with substantial government funds allocated to attract foreign investments. Maitra underscores the need for India’s attractiveness to extend beyond government incentives, recognizing the constraints of limited available funds.
The study emphasizes India’s strengths, particularly its robust domestic market, advocating for an increased presence of global players not only in manufacturing but also in sourcing and software development. Simultaneously, the study encourages Indian companies to aspire to global leadership, leveraging their international reach amid substantial disruptions in the global automotive industry. Central to India’s ambitions is the pursuit of manufacturing excellence at scale. This imperative positions India to rival established global automotive hubs like Japan, Germany, and South Korea, which currently generate over $500 billion annually.
India’s automotive industry is charting a strategic course toward global competitiveness, manufacturing prowess, and technological leadership. As the industry undergoes transformative shifts, India aims not only to secure its position but also to emerge as a formidable force in the global automotive landscape.
