Automobiles are one of the essentials of transportation that drives the economic growth of nations thus making automobile industry an essential component of industrial sector. Automobiles make movement of people, and transportation of goods and weapons convenient (Chitra, M. (2013) and hence making it a fundamental necessity for businesses, individuals and the government for higher productivity. Technological advancements, innovations and reasonable pricing in automobile sector have made it one of the fast-expanding sectors that enhances accessibility, safety, efficiency, convenience and effectiveness. These aspects are driven by the highest levels of technical regulations and policy prescriptions universally. In India, the Central Motor Vehicle Regulation (CMVR), adapts European norms to suit the Indian driving and road conditions, which is basically responsible for enforcing regulations in the road transport sector.

The automobile industry of India mirrors the growth of Indian economy in terms of its performance and technological advancement, managerial knowhow and skill upgradation, enhanced employment opportunities, improved infrastructure, competitiveness and expanded prospects for value addition by domestic businesses. Due to the expanding middle class and changing demography witnessed a greater proportion of youth joining the workforce. This has led to exploring rural markets, while the increased cargo and passenger transportation needs increased the demand for commercial and passenger vehicles. Convenience, affordability, safety, and speed have made automobiles an indispensable part of everyday life of an Indian. The automobile sector contributes to 7.1% of India’s GDP,  up from 2.77% in 1992-93 (PIB, 2023). Further, it contributes 26% of the industrial GDP and value addition accounting for 49% of the manufacturing GVA (SIAM), apart from offering over 37 million direct and indirect employment opportunities (PIB, 2023). Hence, growth and development of the automobile sector in India reflects the performance of its manufacturing sector.  Due to the extensive use of automobiles, the industry has a significant spillover effect on adjacencies and other industries in terms of capital accumulation, scale and scope economies and technological progress (Szirmai, 2013; Marconi, et al. 2016), encouraging transformation, upgradation and greater degree of participation in higher-value added production providing the innovation perspective (Humphrey, & Schmitz, 2002; Yang, et al., 2021) and contributing to exports. It propels innovation, drives infrastructure development, boosts economic growth, creates job and urges technological advancement. All these aspects make the automobile sector an essential component of the Indian economy apart from being one of the largest contributors of GDP among the manufacturing industries. The automobile sector of India is notable for its ability to satisfy the demand of low-and middle-income group (Miglani, 2019) in addition to manufacturing premium category models.

The automobile sector is basically segmented according to vehicle type and fuel usage. The different types of vehicles are two-wheelers (2W), three-wheelers (3W), passenger vehicles (PV), commercial vehicles (CV) and others, while fuel usage is based on the features of fuel efficiency, stringent tailpipe emission and pollution control norms. These are on par with European standards and are a significant selling point to engage in Make in India for the industry for both domestic and global markets. In addition to these, the automobile market is also being disrupted by cutting edge technologies like electric vehicles (EV), connected technology, autonomous driving, telematics, safety, sustainability and shared mobility (PwC, 2023). The transformation and adaptation for these emerging trends and market demands can be met by leveraging the highly skilled talent pool and harnessing the advanced technological capabilities that can be sourced locally for faster development cycle and continuous engineering support, leading to the development of Global Capability Centres (GCC) in India. According to PwC, the number of automotive GCC’s in India has increased dramatically over the last 20 years, from seven in early 2000s to over 60 centres, which generated over USD 3 billion in FY23. To take advantage of the growth momentum and to actively contribute to innovation that aligns with the emerging trends, the automobile industry requires a broad spectrum of know-how and skills in manufacturing and production, specialised engineering knowledge for R&D, design and development, technical skills for vehicle operations, maintenance and repair. These factors individually and collectively have the potential to enhance technical innovation and competitiveness, that would consequently enable the industry to overcome the technological barriers faced by the automotive sector (Latan, et al., 2020).

India’s automobile industry developed in stages. From the initial protectionist policy to promote domestic interest that recommended local content requirement and imposed strict import restrictions through tariffs for trade protection. This was followed by the intermediary stage of license agreements for production and ownership restrictions leading to joint ventures, which further progressed towards the current stage of complete abolition of ownership restrictions resulting in 100% subsidiaries  for both automakers and auto-component manufacturers (Athukorala, & Veeramani, 2019) bringing in confidence, vibrancy, capacity and capability to the sector in its transition (Kumar, et al., 2007). To put it briefly, the sector switched from a policy-protected, restricted approach to a progressive market confirming liberal one that opened up opportunities for investments, technology and knowledge transfer, making it competitive. The automobile sector of India has grown from a modest production and sales figures of cars and commercial vehicles from 13,156 and 16,993 respectively in 1950 (Tariff Commission Report, 1953) to over 28.43 and 23.58 million in 2024 (SIAM, 2024). India has currently achieved the distinction of being the world’s largest producer of 2Ws, 3Ws, and tractors. Moreover, it is also the second largest producer of commercial busses and the third largest producer of heavy commercial vehicles apart from being the third largest manufacturer of passenger vehicles with an overall annual sale in the domestic market of over 4 million units with the potential to emerge as the largest in the world. India is currently a net exporter of automobiles.

Even though India’s position has grown stronger in the automobile sector, it lags when compared to many other countries in terms of cars per thousand people. It is estimated that around 326 million vehicles are currently operating on the Indian roads. Furthermore, owing to the low vehicle ownership index this number is far from saturation. The number of registered vehicles per 1000 person in 2020 was only 246 (Statista, 2024). In 2023-24, the automobile industry produced more than 28.43 million vehicles, this includes two-wheelers (2Ws), three-wheelers (3Ws), passenger cars and commercial vehicles. Talking about share of vehicles produced in absolute numbers, 2Ws are the most produced followed by passenger cars and in terms of market share 77% and 18% respectively. In comparison to India’s population there are only 34 PVs and 185 2W for every 1000 persons (Waghmare, A. 2024, September 27).  However, a growing middle-income class fuelled by increasing disposable income and rapid urbanisation present a significant potential of India for increased motor vehicle ownership and total vehicle stock (Dargay, & Gately, 1999; Dargay, et al., 2007).