India gears up for new growth and an EV revolution

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July’s SMMT International Update features guest writer Kevin McCole, Managing Director at UK India Business Council.

India’s automotive sector is picking up speed after two years of harsh lockdowns that put the brakes on domestic demand. From a peak of 26 million units in 2018-19, sales of new vehicles slumped to 17.5 million in 2021-22, according to the Society of Indian Automobile Manufacturers. Reports suggest sales are now back to pre-pandemic levels with May 2022 a bumper month that saw 1.6 million retail vehicles sold.

But, while domestic sales saw a Covid crash, vehicle exports last year topped 5 million for the first time. That’s because India is not just a massive market, it is also a key supply chain partner for car makers and other advanced manufacturers. Plenty of international OEMs already use India as an export hub and, as companies look to build resilience into their supply chains post-Covid, that number will increase. Korean giant Hyundai uses India as global hub for its hatchback range. TVS Motors, one of the country’s leading makers of two-wheelers, exports to 70 countries. Its success in India and now in other markets is helped by several factors. These include the availability of high-quality components, integration of technology in supply chains, and a mindset of frugal innovation.

India has overtaken China as the world’s largest market for two-wheelers. Affluent young professionals shuttle between tech campuses, satellite housing developments and city centre malls in the country’s bustling tier 2 and tier 3 cities. Aspiration means an appetite for premium brands. Royal Enfield has been one of India’s great success stories over the past decade. Indian truck maker Eicher has breathed new life into the iconic brand, and it has become a status symbol among India’s 440 million millennials.

Perhaps the biggest opportunity in India’s mobility sector right now is the shift to electric vehicles. This is a key pillar of the country’s push to reduce dependence on fossil fuels, bring down emissions, and achieve net zero by 2070.

India is one of the fastest growing EV markets projected to be worth US$150 billion by the end of the decade.

The government predicts sales of 6.4 million EV units in 2027 and wants electric vehicles to account for 30 per cent of private cars and 70 per cent of commercial vehicles by 2030. It’s an ambitious plan backed with action. The Delhi government is investing heavily in charging infrastructure and offering incentives to EV customers. Ola Electric is building the world’s largest EV plant in Tamil Nadu and aims to become the world’s leading urban mobility EV company.

The Government of India has introduced a host of pro-business policies in the past eight years to encourage foreign investment and incentivise advanced manufacturing. This includes a series of production linked incentives introduced in 2021 covering both OEMs and auto components manufacturers.

Much of the world’s economic growth over the coming few decades will take place in India and other large Asian markets. They are not easy places to do business but the potential rewards – both from a market and supply chain perspective are huge.

To discover how you can unlock the potential of India, UK India Business Council is hosting a free webinar on 12 July which will share tips on how to navigate India’s complexity and boost your chances of success in this huge and fast-growing market – register here. Or for a free consultation, email [email protected].

 

SMMT is welcoming a trade delegation from India in August, and will be organising a trade mission in October. Click here for a list of upcoming activities.

The post India gears up for new growth and an EV revolution appeared first on SMMT.

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