Cars and India roads have never been the best fit. However rapid urbanisation and rise in disposable income have given birth to a new breed of Indians who are passionate about cars. With this as a base and Narendra Modi’s ‘Make in India’ initiative as catalyst, the automobile sector is expected to generate up to $300 billion in annual revenues by 2026, contributing over 12 % to the nation's gross domestic product.
The Automotive Mission Plan 2016-26 was unveiled with high hopes. However concerns on high taxes and the absence of key reforms like the goods and service tax in a sluggish economy could hurdle the growth.
India’s automotive industry is expected to grow over 70 million units a year by 2026, the project indicates. . The AMP is aimed at mapping the progress of the country's automobile industry and setting its goals over the next decade. Around 23 million vehicles were produced in India in the year ended on March 31, 2015. The industry is estimated to be worth $74 billion now.
"The biggest challenge (to achieve the aim) is going to be of infrastructure. In India, the second biggest cost that we have to bear is in logistics and transportation, which is about 15 %," said Ravindra Pisharody, executive director, commercial vehicles, at Tata Motors. "However, the projection made is quite achievable."
As per the Society of Indian Automobile Manufacturers (SIAM), the key achievements are investments in excess of Rs 1,60,000 crore and creation of jobs - the target is 35 million by the end of 2016. Besides, the industry is on course to hit the base-case target of Rs 5,49,000 crore revenue. Speaking at SIAM's annual convention in New Delhi, its president, Vikram Kirloskar, highlighted the potential of the industry, but also the risks it is facing.
"There are speed breakers in the form of slow government policies with no clear roadmap on GST and high taxes imposed on the auto industry ... the cumulative burden of taxes to customers on cars goes up to 84 %, making the industry highly uncompetitive," he said.
Others raised concerns over delayed reforms. Mahindra & Mahindra Executive Director Pawan Goenka said political stalemate was pushing several initiatives and this could derail economic recovery. Hero MotoCorp Chairman Pawan Munjal said: "We hope the government policy frame should improve in tune with time as we move ahead and is move in the right direction in the long-term with key reforms being addressed at the earliest."
YS Guleria, senior vice president for sales and marketing at Honda Motorcycle and Scooter India, felt that the government must deliver on its promises, such as on ease of doing business.