The Indian automotive sector is a key employment generator, providing jobs to 37 million people both directly and indirectly. As of FY 2023, India leads globally in manufacturing three-wheelers and tractors, ranks second in two-wheelers and buses, and third in passenger vehicles and heavy-duty trucks. According to a PwC report titled ‘VIKSIT: An Approach for India to Achieve $1 Trillion Exports’, the two-wheeler segment is the largest contributor to vehicle exports, followed by passenger vehicles. Although three-wheelers, commercial vehicles, and tractors contribute smaller shares to exports, the report emphasises the need to capitalise on opportunities in EV manufacturing, EV battery production, and software-defined vehicle (SDV) technologies to achieve India’s $1 trillion export goal. The report also highlights the potential for growth in services that enhance the ownership experience of smart, connected, and sustainable vehicles.

In FY 2019, two-wheelers made up 70% of India's vehicle exports, totalling 3,280,841 units. Three-wheelers accounted for 12% with 567,683 units, passenger vehicles contributed 14% with 676,192 units, while commercial vehicles and tractors each held a 2% share, with 99,933 and 91,792 units exported, respectively. By FY 2023, two-wheeler exports grew to 75% of the total, with 3,652,122 units. The share of three-wheelers decreased slightly to 7% with 365,549 units, while passenger vehicles maintained a 14% share with 662,703 units. The commercial vehicle segment remained at 2% with 78,645 units exported, and the tractor segment increased its share to 3% with 124,542 units shipped.

India's EV export potential is rapidly growing, with exports increasing at a CAGR of 88% from $3.55 million in FY 2019 to $43.88 million in FY 2023. Indian original equipment manufacturers (OEMs) in the EV sector have announced significant investments, and global companies are either setting up manufacturing facilities in India or finalising plans to do so. Over $11 billion in investments are expected from auto OEMs to expand EV manufacturing capabilities in India, with several new EV models under development for both domestic and international markets. While the global battery electric vehicle (BEV) market is projected to grow, overcoming challenges such as government protectionism, reduced incentives, and supply chain disruptions due to geopolitical conflicts will be crucial.

As India advances in EV production and technology, localising EV battery production across the stages of cells, modules, and packs is essential. Historically, India has imported cells from countries like China, South Korea, and Japan. Batteries account for a significant portion of EV costs, but the price of lithium-ion batteries is expected to decrease from $132/kWh in 2021 to $58/kWh by 2030 as the automotive ecosystem scales up manufacturing. Reducing the dependence on critical materials will be key to ensuring supply chain sustainability and resilience.

To effectively penetrate export markets, Indian automotive exporters must innovate beyond the technologies used by global competitors. The PwC report advises private players to focus on offering unique value propositions in the technology lifecycle and to explore how these innovations can be exported while ensuring competitive service in international markets.

The India Brand Equity Foundation's (IBEF) ‘Automobile Industry Report 2024’ estimates that the EV industry could create around 50 million jobs by 2030. While continuing with the existing Production Linked Incentive (PLI) Scheme, the government is encouraged to introduce an innovation-linked incentive scheme specifically targeting next-generation industries and technologies such as smart mobility, hydrogen internal combustion engines (ICE), and fuel cells. The report suggests that manufacturing entities driving disruptive innovations in smart mobility and related services should be rewarded with tax benefits and other incentives to support this growth.

(Entrepreneur India)