India’s auto industry is set to have a healthy year to come, driven by supportive government policies and robust employment market. New research from data analytics company GlobalData names major drivers of expected growth, not least the influence of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) scheme.
Since its inception in April 2019, the FAME II scheme has made a major impact on the Indian automotive industry, especially the electric vehicle (EV) market. By offering states both financial and non-financial incentives, the policy has promoted the use of EVs on a larger scale, the gateway to sustainable transport and economic development.
As per GlobalData’s research, close to 24.7% of the cities researched are likely to experience strong growth in the automotive sector, while 49.5% are likely to experience moderate growth. Key cities such as Mumbai, Hyderabad, and Pune are among the top cities that are likely to flourish. However, close to 7.5% of cities might experience flat growth, while 9.7% and 15.5% might experience moderate declines and negative declines, respectively.
Regional Disparities in Growth
While most of the cities are geared towards a renaissance, others will be struggling. Chandigarh, for example, will struggle to achieve meaningful auto growth owing to local limitations. Hyderabad and Mumbai, however, are well positioned for a turnaround in fortunes, driven by their vibrant service sector and widening opportunities.
Hyderabad has indeed emerged as a center of employment, and this has been spurred by initiatives from the government to promote entrepreneurship and start-ups. The state’s focus on the information technology (IT) and IT-enabled services (ITES) sector has been instrumental in increasing workforce opportunity, thereby contributing indirectly to automobile demand.
Apart from employment and policy, infrastructural development has played a crucial role in transforming automotive industry growth. Places such as Hyderabad have benefited from enhanced road improvements, public transport, and electricity supply, leading to a conducive business environment fostering consumer demand for motor vehicles.
The poll, taken in 31 key cities, underscores the link between employment generation and the growth of the automotive sector. The expanding workforce is creating greater demand for commercial and personal vehicles, adding further momentum to the sector.
Industry Insights and Future Outlook
Madhuchhanda Palit, a GlobalData Automotive Analyst, made regional elements dominant in determining market trends. She pointed out that what occurs in the services sector, industrialization, and government policies decide the destiny of the auto sector in various regions of the country.
Although the overall long-term outlook for India’s car industry is favorable, local conditions such as the implementation of policy, infrastructure advancement, and diversification of economy will finally confirm the rate and extent of development,” she noted.
As India continues to gain ground in electric mobility and evolving employment opportunities, the automotive business is on the threshold of an era of renewal with new opportunity and continued economic expansion.
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