Issues before the Automobile Industry

The Indian auto industry, which is one of the world’s largest (4th largest) with annual sales increasing 9.5% year-on-year to 4.02 million units (excluding two-wheelers) in the year 2017. It also was the 7th largest manufacturer of commercial vehicles in 2018.

Current Situation

• The Two Wheelers segment dominates the Indian market segment in terms of increasing volume.
• The increasing demand is due to to a growing middle class with a lot of disposable wealth and an increasingly young population due to India’s demographic dividend.
• There is also a growing interest in the automobile companies to enter the rural markets has also further aided the growth of the sector.
• India is a major auto exporter and is expected to continue growing the future.
• Automobile exports grew by 14.5% during FY 2019 and are expected to grow at a CAGR of 3.05% during 2016-2026.

What the Government is doing?

Several initiatives have been launched by the Government of India to make India a leader in the two-wheeler and four-wheeler market in the world by 2020.

What are the issues before the industry?

The automotive industry is facing a major slowdown as the vehicle sales in all segments have fallen significantly for the past few months.

The auto components industry which manufactures components for the auto industry is being forced to reduce its output. It had requested a reduction in GST rate to 18% unform for the entire auto industry to stimulate demand.

The auto component industry employs about 50 lakh people and it fears that over 10 lakh people could lose their jobs vehicle demand in the country is not encouraged in the country.