How Indian automobile industry has contributed towards growth in India?

automobile industry
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On the canvas of the Indian economy, the automobile industry(including heavy commercial vehicles, the auto component industry) occupies a prominent place. Due to its deep forward and backward linkages with several key segments of the economy, the automotive industry has a strong multiplier effect and is capable of being the driver of economic growth.

A sound transportation system plays a pivotal role in the country’s rapid economic and industrial development.

The well-developed Indian automotive industry ably fulfills this catalytic role by producing a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three-wheelers, tractors, etc.

The automobile industry is one of the core industries of the Indian economy, whose prospect is reflective of the economic resilience of the country.

Continuous economic liberalization over the years by the government of India has resulted in making India as one of the prime business destinations for many global automotive players. The automotive sector in India is growing at around 18 percent per annum.

Automobile Industry was delicensed in July 1991 with the announcement of the New Industrial Policy.

The passenger car industry was, however, delicensed in 1993. No industrial license is required for setting up any unit for the manufacture of automobiles except.

Contribution of the automobile industry in India


The automotive industry, one of the largest industries in India, has been witnessing impressive growth during the last two decades.

The industry has been able to restructure itself, absorb newer technology, align itself to the global developments, and realize its potential.

This has significantly increased industry contribution to overall industrial growth in the country. The automobile sector recorded a growth of 13.56% in 2019. Vehicle production grew at 8.78% in April-May 2019 over April-May 2019.

Also Read: Write any five characteristics of automobile industry in India

Domestic Sales

The growth of the Passenger Vehicles segment from April –  July 2019 was 10.97 percent, which is lower than the first-quarter growth of 15.08 percent.

Passenger Cars grew by 8.91 percent, Utility Vehicles by 16.03 percent, and Multi-Purpose Vehicles by 24.62 percent in this period.

How Indian automobile industry(including heavy commercial vehicles, the auto component industry) has contributed towards growth in India?

The overall Commercial Vehicles also grew by 8.00 percent, which is lower than the first-quarter growth of 9.59 percent.

Medium & Heavy Commercial Vehicles grew at 5.45 percent, and Light Commercial Vehicles recorded a growth of 11.13 percent.

Three Wheelers sales recorded an improvement in April – July 2019 over the first-quarter growth.

Three Wheelers sales grew by 3.28 percent. While Passenger Carriers grew by 18.62 percent during April – July 2019, Goods Carriers declined by 21.71 percent.

Auto Components Industry

The surge in the automobile industry since the nineties has led to the robust growth of the auto component sector in the country.

In tandem with the industry trends, the Indian component sector has shown great advances in recent years in terms of growth, spread, absorption of new technologies, and flexibility.

Indian auto component industry has seen major growth with the arrival of world vehicle manufacturers from Japan, Korea, the US, and Europe.

Today, India is emerging as one of the key auto components centers in Asia.

India is also expected to play a significant role in the global automotive supply chain in the near future.

The Auto Component Industry is today considered as the sunrise industry with huge growth prospects.

This industry is also expected to drive the growth of the engineering sector.

This is so because of its strong downstream and upstream linkages with many other segments of the engineering sector.

These include raw materials, capital goods, intermediate products, etc.

The potential of this sector has been amply highlighted in the Automotive Mission Plan drawn up by the Ministry of Heavy Industries & Public Enterprises.

Prime Minister unveiled AMP in January 2017. This document lays down the collective Vision of the industry. It also includes the Government for 2019 for the automotive industry.


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