India Announces Second Ten-Year Automotive Mission Plan | Item


At the Society of Indian Automobile Manufacturers (SIAM) annual convention last week, the Indian government unveiled preliminary details of its second Automotive Mission Plan (AMP).

The plan, which was reported in Economic times, covers the period 2016-2026 and aims to quadruple the industry during this period to reach between 260 and 300 billion dollars. The plan also aims to place India among the top three automotive industries in the world with passenger car sales expected to reach between 9.4 million and 13.4 million by 2016 (it is currently the fifth largest market automobile).

According to forecasts by analyst PwC, over the next 10 years, light vehicle assembly in India is expected to increase by nearly 194% to 10.8 million units, placing it in third place in terms of production behind China and the United States. PwC’s forecast for light vehicle sales, meanwhile, shows an increase of nearly 238% between 2015 and 2025 to reach 10.2 million units, again a third place behind China and the United States. United. However, it should be noted that in both cases, India’s increase is by far the largest, with China’s production and sales increasing over the next decade around the 50 mark. % and that of the United States down, with a 5.7% increase in assembly during the period and a 9% increase in sales.

To support India’s growth, the government has said it will invest to improve infrastructure and also seek to increase exports to between 35 and 40 percent of overall production.

The second phase of the AMP will also aim to increase annual sales of commercial vehicles to between 2 and 4 million units, up from 700,000 last year, and to increase sales of tractors from 600,000 to between 1.5 and 1.7 million units during the same period.

On the incoming side, the government’s plans will seek a reduction in import duties on raw materials and, as well as the implementation of the much-anticipated Goods and Services Tax (GST) bill.

As reported in December of last year, the Indian government approved the Constitutional Amendment Bill and plans to roll out the tax from April 2016.

The GST will rationalize national and central indirect taxes into a harmonized tax on goods and services and create a unified market, which will allow the smooth flow of goods between states, a particularly important initiative for the automotive logistics industry which will hopefully it will also reduce business costs.

Need clarity
According to industry analyst, IHS Automotive, although preliminary details and figures have been released, the plan lacks clarity in the form of policy guidance and real-time benefits for Indian automakers, which have been waiting for some time

A number of those automakers who were approached about the implications of the plan were unwilling to comment. Neither does SIAM.

There are a number of economic issues, including investment in infrastructure, that need to be addressed in India, although ironically it is the lack of public infrastructure that is fueling car sales.

“India’s growth story relies to a large extent on domestic consumption, while exports, in the absence of favorable trade deals with key economies, largely depend on the cost advantage. labor and materials, ”IHS Automotive said at a briefing. “The country’s domestic market suffers from high inflation and interest rates, but increasing urbanization and lack of public infrastructure are fueling domestic demand for vehicles, especially in the passenger vehicle segment.

First stage
AMP was launched in its first phase in 2006 for an initial period of 10 years with the aim of making India a favorable production location for global car manufacturers. The plan focused on enhancing competitiveness in the domestic vehicle manufacturing industry and the flow of technology, demand, brand building and infrastructure, among other areas.

Between 2005 and 2015, Indian vehicle production jumped 189.6 percent to 3.8 million vehicles last year from 1.3 million in 2005, according to PwC figures. Sales in the country increased 156% to 3.04 million last year, from 1.18 million in 2005.

Further coverage of AMP 2026 will follow as details are released in the coming weeks.

The latest plan for the Indian auto industry will be one of many topics under discussion at this year’s Automotive Logistics India conference, to be held in Delhi in December. Learn more and register here

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