Risk Review Report on Automobile Industry by Alea Consulting


The Indian automobile industry constitutes 7.1% of India’s GDP and employs approximately 
29 million people. In 2017 sales of passenger and commercial vehicles grew by 9.5% and India emerged as the 4th largest market in the world with 4.02 million units sold.

The automotive industry consists of commercial and passenger vehicles, including two & three wheelers. The major automobile manufacturing establishments are around Delhi-Gurugram-Faridabad; Mumbai-Pune-Nashik-Aurangabad; Chennai-Bengaluru-Hosur and Kolkata-Jamshedpur.

Industry Evolution

On April 1, 2017 Bharat Stage-VI emission norms came into effect. Industry is expected to manufacture compliant vehicles from 2020. The industry is shifting to electric vehicles (EV) to reduce its carbon foot print and decrease levels to approximately 35% by 2030.

Key Drivers

  • India as an outsourcing hub for international OEMs/automobile

  • Government initiatives, including Make in India, Automotive Mission Plan 2026 and NEMMP 2020

  • Improving road and highway infrastructure, including EV charging points

  • Availability of skilled manpower

  • Expanding R&D hub

  • Rising income levels

  • Large base of quality suppliers

  • Greater availability of credit and financing options

Key Statistics

  • Total production of passenger vehicles crossed 4 million in March 2018. While sales grew by 6.38% to 300,722 units, over 747,000 units were exported.

  • SIAM expects higher passenger vehicle sales in 2018-19. Commercial vehicles likely to grow at a low double-digit.


Segment-Wise Sales



Change (%)

Passenger Vehicles




Commercial Vehicles





Source: SIAM, Industry Data

Government Initiatives

  • Automotive Mission Plan 2016-26 targets a 4-fold growth in the automobile sector, which includes automobiles manufacturers, OEMs & tractor industry

  • US$388 million will be spent under National Automotive Testing and R&D Infrastructure Project to create state-of-art R&D infrastructure

  • Motor Vehicles (Amendment) Bill, 2017 passed by the Lok Sabha addresses issues such as third-party insurance, regulation of taxi aggregators, road safety and citizens’ facilitation by the transport department, strengthening rural transport, last mile connectivity and public transport, automation and computerization and enabling online services

  • Draft Voluntary Vehicle Fleet Modernization Program proposes to scrap the use of vehicles over 15 years

  • In 2013, National Electric Mobility Mission Plan (NEMMP) 2020 was launched to achieve national fuel security by promoting hybrid and EVs and targets the sale of 6-7 million units of hybrid and EVs y-o-y. Energy Efficiency Service Ltd. is floating tenders for electric cars to give impetus to its usage.

  • Automobiles to be digitally enabled with a national rollout of reloadable RFID Smart Tag operational at 180+ toll plazas

  • Faster Adoption and Manufacturing of (Hybrid) Electric Vehicles in India (FAME) policy supports the development of EV and hybrid vehicles and their manufacturing ecosystem to achieve self-sustenance by 2020. Central Government proposed financial support of US$1.3 billion under Phase II of FAME towards manufacturing of zero emission vehicles.


Recent Investments/Tie-Ups

June 2018

  • Suzuki Motor Japan aims to produce 35,000 EVs annually in India starting 2020-21

May 2018

  • JSW Energy to double investment to US$956 million for its EV manufacturing unit

  • Tata Motors signed MoU with Maharashtra State Government for deployment of 1,000 EVs

March 2018

  • Setco Automotive to invest US$35 million in capacity, and plant modernization

  • Maruti Suzuki and Toyota executed an India cross-badging agreement – Maruti Suzuki to supply its Baleno and Vitara Brezza models to Toyota, in return for Toyota’s Corolla model to Suzuki

February 2018

  • Essel Infraprojects to invest US$ 625 million in EVs in Uttar Pradesh

  • Suzuki Motor Japan to invest US$3 billion to maintain its dominance and transition to electric and hybrid vehicle technology

November 2017

  • M&M partnered with Uber to deploy e-sedan e-Verito and hatchback e2o Plus on Uber platforms in Delhi and Hyderabad

Foreign Domestic Investment (FDI)

100% FDI is permitted under automatic route. According to the Ministry of Commerce & Industry, the cumulative FDI inflow into the automobile industry from April 2000 to December 2017 was US$18.41 billion.

Isuzu, Ford, Daimler, Renault, SAIC General Motors and Suzuki have invested more in India.KIA joins with a proposed investment of US$2 billion and production capacity of 300,000 vehicles per year from its Andhra Pradesh facility. SAIC Motor is slated to enter in 2019 with the MG brand. Lexus is considering assembling its ES brand due to lower import tariffs on auto parts.


  • SIAM suggested revision of GST rate structure for all passenger vehicles. In December 2017 it proposed a reduction of GST on EVs to 5%, besides a one-time IT deduction of 30% of vehicle price for non-financed buyers and recommended that EVs be fully exempted from road tax and toll charges.

  • To promote and protect domestic EV manufacturing, the panel headed by Road Transport Secretary suggested that tax benefits be granted for investments made in R&D.

Industry Opportunity

With low vehicle penetration, improving economic fundamentals and tremendous growth potential, India aspires to be the 3rd largest auto market by the end of 2020. The sector has the potential to create 65 million additional jobs, contributing over 12% to India’s GDP and generating up to US$300 billion in annual revenue by 2026. India needs to embrace the EV opportunity by developing processes of shifting to EVs. This process should be enabled by government policy, infrastructure sustenance and strong support of EV manufacturers.

About Alea

Alea is a global risk mitigation and investigative consulting firm, which helps organizations reduce reputation and operational concerns. The firm has conducted significant assignments for international organizations and industries, including insurance, banking, financial services, telecom, manufacturing, healthcare, pharmaceutical, mining, real estate, retail, EPC, renewable energy, hotels, education, logistics, diagnostics, power, and infrastructure.

Alea’s risk mitigation services include: senior employee background checks, KYC/AML checks, corporate intelligence, asset searches, intellectual property protection, crisis management response, insurance & fraud investigations, litigation support and due diligence of business partners.

Source: NV1

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