1.

Introduction

The need of this Mission Plan arises in the background of a new strength and resurgence in
the Indian manufacturing division. For most of the time of the 1990s, post the financial
deregulation in 1991, development in the Indian economy has been led by growth in the
service division, a growth that has overshadowed the growth in the developed sector. In the
past few years, several trades in the Indian manufacturing sector have become globally
competitive and have developed over energy to develop. Some industries, with the
automotive industry, sincerely trust that they can developed world-beaters.

1.1 Automotive Mission Plan 2006-2016

Indias Automotive Mission Plan (AMP) 2006-2016 is a cooperative effort between the
Indian government, the automotive industry, and academe.11 The stated vision of AMP is for
India to arise as the purpose of choice in the world for project and production of automobiles
and auto works with output attainment a level of U.S. $145 billion office for more than 10 per
cent of the GDP and if additional employment to 25 million persons by 2016.12 India is
currently the eleventh largest inside car market in the world and aims to be the seventh largest
market by 2016. While the auto industry has experienced strong growth over the past period,
it still plays a minor role in the global industry. According to AMP, India has about 2.37 per
cent of the world production of inside and commercial vehicles and exports from India
contribute about 0.3 per cent of the worldwide auto trade. The AMP makes a number of
suggestions for actions to be taken by both the government and industry in order for India to
fulfil the goals laid out in the plan. For example, they estimate an asset of about $35-40
billion in the automobile sector over the 2006-2016 times retro will be required to implement
AMP. The governments responsibility would be to simplify substructure creation, promote
the countrys skills, create a favourable and expected business environment, attract savings
and help R&D. 13 Industrys responsibility fears issues such as designing and
manufacturing value products, improving productivity, maintaining costs, among others.
AMP also calls for the development of an proper development policy; improving road, rail,
port, and energy substructure; expanding demand for automobiles domestically; and,
developing a roadmap to address ecological and care concerns.
1.2 Automotive Mission Plan 2016-26

The Automotive Mission Plan 2016-26 (AMP 2026) is the cooperative vision of Government
of India (Government) and the Indian Automotive Industry on where the Automobiles, Auto-
components, and Tractor industries should reach over the next ten years in terms of size,
contribution to Indias development, global footprint, technological maturity, attractiveness,
and official construction and competences. AMP 2026 also pursues to define the path of
evolution of the automotive ecology in India including the glide path of specific regulations
and policies that govern research, design, technology, testing, manufacturing, import/ export,
sale, use, repair, and recycling of automotive vehicles, components and services. AMP 2026
is a document that is aimed at multiple stakeholders in India and overseas, and seeks to
communicate the Government and industrys intent and objectives pertaining to the Indian
Automotive industry, comprising the automotive vehicle manufacturers, the auto-component
manufacturers and tractor manufacturers who operate in India.
The complete list of investors indicates the pervasive and fast expanding footprint of
automobiles in our society and the assorted manner in which automotive products and
facilities interact with dissimilar kinds of persons, groups, institutes, and organisations. Each

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 stakeholder has a dissimilar perspective (read benefit, cost, benefit, and probability) of the
Automotive division, and so AMP 2026 is an try to provide a same page view to all of
them in a coherent and cogent way of Government & Industrys vision and policy goals for
the Automotive sector

1.3 Evolution and Growth of Industry in World

The automotive sector is one of the core industries of the Indian economy. Indian Auto
industry has come of age only since the complete deli censing of 1991. Indian auto industry
defied global economic depression and continued to register high sales both in domestic and
export markets. In 2007, India was ranked as the 12th fastest developing market in the world.
Presently, India is the 2nd biggest two wheeler market in the world and 4th biggest profitable
vehicle market worldwide. India is the 11th largest market in the passenger car segment
globally which is predictable to become the 7th largest market by 2016. India holds a overall
of 3% share in global four wheeler manufacture and ranks 9th in the world in the production
of cars. There is a huge potential which needs to be tapped through an incorporated strength
of the government, OEMs and also the automobile component manufacturers. India is a base
for the developed of small cars and has attracted the attention of global giants for investing in
this segment. The graph below (figure) shows that Indian Automobile Industry has a potential
to sell 31.96 million automobiles by 2015-2016.

Potential vehicle sales in India (2015-2016)

Source: SIAM
It is projected that Indian automobile industry will be among the worlds top five automotive
markets by 2025, due to the huge upcoming potential for development. Ernst and New have
predicted the Indian passenger car market to grow at 12 per cent annually over the next five
years to touch 3.75 million components by 2014 from 1.89 million units at present. Analysts
with Ernst and Young say that The industrys turnover is estimated to bit $155 billion by
2016, this would make the Indian automobile industry the seventh biggest in the world, and
the third biggest by 2030, late China and the US. The governments Automotive Mission
Plan also envisages India emerging as the worlds seventh largest carmaker by 2016,
contributing over 10 per cent to the countrys $1.2-trillion economy from under five per cent
at present.

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1.4 Evolution and Growth of Industry in India

The Indian government and the Culture of Indian Automobile Manufacturers (SIAM) have
exposed the latest automotive roadmap, recognised as the Automotive Mission Plan for
201626 (AMP 2026), which is meant at boosting the country's vehicle developed operations,
reports news magazine the Economic Times. The AMP 2026 was unveiled on the side-lines
of the 55th SIAM Yearly Convention held in New Delhi yesterday (2 September).
The Indian government and SIAM are targeting the total value of vehicle-related production
to reach as much as INR18.9 trillion (USD284.8 billion) by 2026, below the AMP 2026, from
the current stages of INR4.64 trillion. The figure is the top end of projections based on
normal industry growing of 5.8% each year and usual GDP growing of 7.5% each year
during the 10 year period. It includes the influence from sales of cars, trucks, tractors,
motorcycles, scooters, and components in the local market, as well as exports. The AMP
states, "The automotive industry can be termed as the mother of the manufacturing sector in
an economy, as its riches directly impact the fortunes of several related manufacturing
industries. The rapid growth of the Indian automotive industry will provide a strong boost to
the micro and small and medium industries of the country across several sectors."
Some of the targeted key highlights of the AMP 2026 for the Indian automotive industry by
the financial year ending 2016 are:
1. The generation of some 65 million new jobs in the country during the 10-year period;
2. India to be among the top three automotive industries globally, with vehicle exports
accounting for nearly 35-40% of local production;
3. A 3.5- to fourfold growth in the Indian automotive industry by value, from the current
USD74 billion to some USD260300 billion;
4. The Indian automotive industry to contribute over 12% to India's GDP;
5. Passenger car sales are prophesied to grow to some 9.413.4 million units from the recent
equal of 3.2 million components; an increase in commercial vehicle sales from the current
level of 0.7 million components to some 23.9 million units and tractors from 0.6 million
components to some 1.51.7 million units;The Indian automotive component industry to
grow from the current levels of INR120 billion to some INR593.5732 billion; and
6. The Indian government means to make the country's automotive industry the engine of its
"Make in India" movement.

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1.5 Growth targets:
AMP 2026 envisages that the Indian Automotive Industry will grow 3.5 - 4 times in value
from its current output of around ` 4,64,000 crore (circa 2015, which is one year before the
end of the Mission Plan period) to about ` 16,16,000 - 18,88,500 crore by 2026, based on a
base case with average GDP growth of 5.8% and an optimistic case with an average GDP
growth of 7.5% during the period. The following chart provides current and projected
composition of the industry over the next decade.

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2.Industry Scenario
2.1 Global Scenario
In the initial years, most of the manufacturing activities were concentrated in the USA
and in some of the European countries. Though, these countries still account for a
significant share in the production, more and more volume of production comes from
other parts of the world, like China, Japan and Korea. Around three-fourths of the global
production is being carried out in top 10 producing countries, in 2007. Of these, Japan,
USA and China, cumulatively constitute over 40% of global production[3]. The last
decade has experienced a growing level of motorization, as reflected by the production of
automobiles. According to OICA, Japan is the largest producer of cars in the world
followed by China, Germany, USA, South Korea and France. India ranks 9th in the
production of cars in the world ahead of UK, Canada, Russia and Mexico. USA is the
largest producer of commercial vehicles; close competitors in production of commercial
vehicles are China, Japan, Canada, Thailand and Mexico. India ranks 8th in the
production of commercial vehicles and is ahead of countries like Brazil, Germany, France
and Turkey

2.2 Indian Scenario

Indian automobile and auto- components industry, barring downtrends in few years, was
on a growth trajectory, aided by robust economic activity and infrastructure development;
growing middle-class population with disposable income; and growing consumer
demand. The Indian automobile and auto components industry produces a wide range of
models and products. The industry has witnessed high sales turnover, in the last few
years, and the exports too have surged over the years. However, the recessionary trends in
world market and financial sector meltdown has affected the growth trend of the industry
during 2011-12. The norms for foreign investment and import of technology have also
been progressively liberalized over the years for manufacturing of vehicles, including
passenger cars, in order to make this sector globally competitive. With the gradual
liberalization of the automobile sector, since 1991, the number of manufacturing facilities
in India has grown progressively. At present there are about 15 manufacturers of
passenger cars & multi utility vehicles, around 10 manufacturers of commercial vehicles,
around 15 manufacturers of 2/3 wheelers, besides 5 manufacturers of engines. It is
estimated that the Indian automotive industry contributes more than 5% of the national
GDP, and tax contribution of the sector to the exchequer is estimated to be Rs. 25,000
crores. The industry provides direct and indirect employment to over 1.3 crore people.
The turnover of the automobile industry was estimated to be around US $ 35 billion and
that for components industry was at US $ 18 billion in 2007-08. The investment in
automotive industry, comprising of the automobile and the auto component sectors,
which was estimated to be at Rs. 50,000 crore in 2002-03, has gone upto Rs. 80,000 crore
by the year 2007-08. With the saturation of traditional automobile markets, such as EU,
USA and Japan, the growth opportunities for emerging markets such as India have been
increasing. India is aggressively looking forward to take advantage of its inherent
strengths in automotive design and manufacturing capabilities and position itself as an
export base for vehicles as well as components.

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3. Market Players and Market Share

The Indian auto-components industry can be broadly classified into the organised and
unorganised sectors. The organised sector caters to the Original Equipment
Manufacturers (OEMs) and consists of high-value precision instruments while the
unorganised sector comprises low-valued products and caters mostly to the aftermarket
category.
Over the last decade, the automotive components industry has scaled three times to US$
40 billion in 2015 while exports have grown even faster to US$ 11 billion. This has been
driven by strong growth in the domestic market and increasing globalisation (including
exports) of several Indian suppliers.
The Indian Auto Component industry is expected to grow by 8-10 per cent in FY 2017-
18, based on higher localisation by Original Equipment Manufacturers (OEM), higher
component content per vehicle, and rising exports from India, as per ICRA Limited.
According to the Automotive Component Manufacturers Association of India (ACMA),
the Indian auto-components industry is expected to register a turnover of US$ 100 billion
by 2020 backed by strong exports ranging between US$ 80- US$ 100 billion by 2026,
from the current US$ 11.2 billion.

4. Expansion of Domestic Demand

In order to facilitate expansion of domestic market, following are the set of initiatives to
be followed by Industry and Government:
Industry will strive for acquisition of tools for faster product design and validation
(IT, rapid-proto, etc.) for enhancing the capability to create and introduce products
that are appropriate to the market needs at a quicker pace and on a sustainable basis.
Support will be extended to introduce courses on automotive design. A styling center
could be a part of the National Institute of Design.
Industry will work towards bridging the gaps on product quality, aesthetics, features
and performance with world class products. Government will support Development
Centers for Small and Medium Enterprise Suppliers providing Training and
Development, Consultancy, Project handling and Business Development Support
Services.
Industry will enhance the cost competitiveness on a continuous basis to develop
domestic market. Government would examine fiscal incentives/concessions for
innovation of low cost products that are aimed at consumers at the mass market like
cost effective small goods carrier, rugged low cost rural vehicle, small safe car, low
cost two wheeler, etc.
An attempt would be made to encourage the Introduction of GST at theearliest.VI.
Government of India has already set up committees to look into various tax
proposals and incentives. These committees would look into the elimination of
embedded taxes/levies that do not get off-set under VAT.
In order to boost domestic demand and create volumes for industry, government
from time to time will devise suitable fiscal and promotion policies to make India a
hub for manufacture of small cars, MUVs, two-wheelers, tractors and auto
components Government is aware of the potential of this sector and fiscal
concessions havebeen provided from time to time to give fillip to the auto industry.
The tax anomalies/problems as regards inverted duty structures, high input prices,
excessive imbeddedtaxes and levies are also being addressed by the government.

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 5. Industry Analysis
5.1 PESTLE Analysis
PESTLE Analysis is a simple, useful and widely-used tool that helps you understand the
"big picture" of your Political, Economic, Socio-Cultural and Technological, Legal and
Environmental aspects. As such, it is used by business leaders worldwide to build their
vision of the future.

PESTLE analysis is concerned with the environmental influences on a business.

Identifying PESTLE influences is a useful way of summarizing the external environment
in which a business operates. However, it must be followed up by consideration of how a
business should respond to these influences.

It is important for these reasons:

First, by making effective use of PESTLE Analysis, you ensure that what you are
doing is aligned positively with the powerful forces of change that are affecting our
world. By taking advantage of change, you are much more likely to be successful than
if your activities oppose it;
Second, good use of PESTLE Analysis helps you avoid taking action that is doomed
to failure from the outset, for reasons beyond your control; and
Third, PESTLE is useful when you start operating in a new country or region. Use of
PESTLE helps you break free of unconscious assumptions, and helps you quickly
adapt to the realities of the new environment.
5.1.1 PESTLE Analysis of Automobile Sector
5.1.1.1 Political
In 2002, the Indian government formulated an auto policy that aimed at promoting
integrated, phased, enduring and self-sustained growth of the Indian automotive
industry
Allows automatic approval for foreign equity investment up to 100% in the
automotive sector and does not lay down any minimum investment criteria.
Formulation of an appropriate auto fuel policy to ensure availability of adequate
amount of appropriate fuel to meet emission norms
Confirms the governments intention on harmonizing the regulatory standards with
the rest of the world
Indian government auto policy aimed at promoting an integrated, phased and
conductive growth of the Indian automobile industry.
Allowing automatic approval for foreign equity investment up to 100% with no
minimum investment criteria.
Establish an international hub for manufacturing small, affordable passenger cars as
well as tractor and two wheelers.
Ensure a balanced transition to open trade at minimal risk to the Indian economy and
local industry.
Lying emphasis on R&D activities carried out by companies in India by giving a
weighted tax deduction of up to 150% for in house research and R&D activities.
Plan to have a terminal life policy for CVs along with incentives for replacement for
such vehicles.

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 Promoting multi-model transportation and the implementation of mass rapid transport
system.

5.1.1.2 Economic
The level of inflation Employment level per capita is right.
Economic pressures on the industry are causing automobile companies to reorganize
the traditional sales process.
Weighted tax deduction of up to 150% for in-house research and R & D activities.
Govt. has granted concessions, such as reduced interest rates for export financing.
The Indian economy has grown at 8.5% per annum.
The manufacturing sector has grown at 8-10 % per annum in the last few years.
More than 90% of the CV purchase is on credit.
Finance availability to CV buyers has grown in scope during the last few years.
The increased enforcement of overloading restrictions has also contributed to an
increase in the no. of CVs plying on Indian roads.
Several Indian firms have partnered with global players. While some have formed
joint ventures with equity participation, other also has entered into technology tie-
ups.
Establishment of India as a manufacturing hub, for mini, compact cars, OEMs and
for auto components.

5.1.1.3 Social
Since changed lifestyle of people, leads to increased purchase of automobiles, so
automobile sector have a large customer base to serve.
The average family size is 4, which makes it favorable to buy a four wheeler.
Growth in urbanization, 4th largest economy by ppp index.
Upward migration of household income levels.
85% of cars are financed in India.
Car priced below USD 12000 accounts for nearly 80% of the market.
Vehicles priced between USD 7000-12000 form the largest segment in the passenger
car market.
Indian customers are highly discerning, educated and well informed. They are price
sensitive and put a lot of emphasis on value for money.
Preference for small and compact cars. They are socially acceptable even amongst the
well off.
Preference for fuel efficient cars with low running costs.

5.1.1.4 Technological
More and more emphasis is being laid on R & D activities carried out by companies
in India.
Weighted tax deduction of up to 150% for in-house research and R & D activities.
The Government of India is promoting National Automotive Testing and R&D
Infrastructure Project (NATRIP) to support the growth of the auto industry in India
Technological solutions helps in integrating the supply chain, hence reduce losses and
increase profitability.

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 Customized solutions (designer cars, etc) can be provided with the proliferation of
technology
Internet makes it easy to collect and analyse customer feedback With the entry of
global companies into the Indian market, advanced technologies, both in product and
production process have developed. With the development or evolution of alternate
fuels, hybrid cars have made entry into the market.
Few global companies have setup R &D centers in India.
Major global players like audi, BMW, Hyundai etc have setup their manufacturing
units in India.

5.1.1.5 Environmental
Physical infrastructure such as roads and bridges affect the use of automobiles. If
there is good availability of roads or the roads are smooth then it will affect the use of
automobiles.
Physical conditions like environmental situation affect the use of automobiles. If the
environment is pleasant then it will lead to more use of vehicles.
Technological solutions helps in integrating the supply chain, hence reduce losses and
increase profitability.
With the entry of global companies into the Indian market, advanced technologies,
both in product and production process have developed.
With the development or evolution of alternate fuels, hybrid cars have made entry into
the market.
Few global companies have setup R &D centers in India.
Major global players like audi, BMW, Hyundai etc have setup their manufacturing
units in India

5.1.2.6 Legal
Legal provision relating to environmental population by automobiles.
Legal provisions relating to safety measures.
Confirms the governments intention on harmonizing the regulatory standards with
the rest of the world
Indian government auto policy aimed at promoting an integrated, phased and
conductive growth of the Indian automobile industry.
Establish an international hub for manufacturing small, affordable passenger cars as
well as tractor and two wheelers.
Ensure a balanced transition to open trade at minimal risk to the Indian economy and
local industry.

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5.2 Porters Five Forces Analysis

Porters five forces outline in regard to the automotive industry in India outlines, new
entrant threats, customers/buyers bargaining power, threat of substitute products,
bargaining power held by suppliers and the level of rivalry among competitors. These five
forces largely influence how the industry performs and they can be outlined as follows:
5.2.1 New entrants threat
In majority of markets, the expertise and capital required to setup parts or auto
manufacturing facilities would be a huge entry barrier. What this means is that new
entrants would have a hard time setting up. However, this is not the case in India
given its incredible forecasts on growth, infrastructure progress as well as ever
increasing financing options. All these aspects make the industry attractive. This
translates to:
High capital requirement
High sunk costs that limit competition
Requirement of advanced technologies
Patent limit for new competition
Economies of scale
Need to brand names that are strong

5.2.2 Customers/buyers bargaining power

When it comes to choice, buyers in India have numerous options to choose from.
There are over twenty foreign manufacturers in the country and this includes high end
manufacturers like Lamborghini and Rolls-Royce. What is more, they also have a
large number of cheap options to choose from such as the well-known Tata Nano.
Because of this:
The buyer price sensitivity is low
There is a low distributors dependency
The number of customers is large

5.2.3 Threat of substitute products

India is well known for 2-wheelers (mopeds and bikes) and 3 wheelers which are real
and obvious threats to manufacturers of automobiles. This means:
There is a high threat in terms of making a switch to substitutes
The substitutes are limited

5.2.4 Bargaining power held by suppliers

It is very likely that manufactures have high bargaining power. This means they
cannot be held at ransom by one manufacturer because they can easily market their
products in India. This translates to:
High level of competition among suppliers

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 Low suppliers concentration
Critical inputs production
Critical volume to suppliers

5.2.5 Level of rivalry among competitors

The rivalry in India is high and yet, the industry has not yet reached its phase of shake
out and it is still making struggles to measure up to leaders in the automobile industry.
This is translated to:
Product differentiation
Low costs of storage
Limitations by the government to curb competition
Large size industry
Fast growth rate in the industry
Entry of few competitors

5.3 SWOT Analysis:

SWOT analysis of the Indian automobile and auto components sector

5.3.1 Strengths
Large domestic market
Rise in the Export level
Low cost and cheap labour
Government incentives for manufacturing plants
Investment by foreign vehicle Manufacturer

5.3.2 Weaknesses
Low labour productivity
High interest costs and high overheads make the production uncompetitive
Various forms of taxes push up the cost of production
Low investment in Research and Development
Infrastructure bottleneck

5.3.3 Opportunities

Focus from the Government in improving the infrastructure

Increase in the income level
Cut in excise duties
Rising rural demand

5.3.4 Threats
Rising cost of Raw materials
Rising interest rates
Too much competition

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5.4 BCG Matrix

5.4 Industry BCG matrix

BCG matrix has two dimensions market share and market growth .The basic idea
behind it is: if a product has biggest market share, or if the products market grows
faster. It is better of the company.

The four segment of BCG matrix:

STAR- high growth and high market share.
CASH COW- low growth and high market share
DOG- low growth and low market share
QUESTION MARK- high growth and low market share.

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 MARKET GROWTH EARNINGS CASH NEED STRATEGY
SHARE RATE

STAR High High High, Stable, High Invest,

Growing Integrate,
Take Over

QUESTION Low High Low, High Harvest,

MARK Unstable, Divest
Growing

CASH COW High Low High, Stable Low Maintain

Market
Leadership

DOG Low Low Low, Low Harvest,

Unstable Divest,
Liquidate

5.4.1 STAR:
The Company has long run opportunity for growth and profitability. They have high
relative market share and high Growth rate.

5.4.2 QUESTION MARK:

New products with potential for success but there cash needs are high and cash
generation is low. In auto industry has been improve the organization reputation as
they want successful not only in Indian market but as well as in global market.

5.4.3 CASH COW:

It has high relative market share but compete in low growth rate as they generate cash
in excess of their needs.

5.4.4 DOG:
The dogs have no market share and do not have potential to bring in much cash.

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5.5 VALUE CHAIN ANALYSIS
The value chain is a systematic approach to examining the development of
competitive advantage. It was created by M. E. Porter in his book, Competitive
Advantage (1980).The chain consists of a series of activities that create and build
value. They culminate inthe total value delivered by an organization. The 'margin'
depicted in the diagram is the same as added value. The organization is split into
'primary activities' and 'support activities.'

5.5.1 Primary activities:

Those that are involved in the creation, sale and transfer of products (including
after-sales service)
Inbound logistics
Operations
Outbound logistics
Sales and marketing
Service and support

5.5.2 Support Activities:

Those that merely support the primary activities

Firm Infrastructure
Human resources
Tech. development
Procurement

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5.5.1 Primary activities:

5.5.1.1 Inbound Logistics

Here goods are received from a company's suppliers.
They are stored until they are needed on the production/assembly line.
Goods are moved around the organization.
Purchases their raw material from all around the world, In order to maximize their
availability of raw material

5.5.1.2 Operations
This is where goods are manufactured or assembled.
Individual operations could include organizing the parts to make new cars & the
final tune for a new car's engine.
Industries are known for their reliability which comes from efficient operations.
For e.g. Toyotas JIT

5.5.1.3 Outbound Logistics

The goods are now finished, and they need to be sent along the supply chain to
wholesalers, retailers or the final consumer.
Many Manufacturers manage their own Showrooms in different countries.
Sometimes even raw parts are supplied to different Manufacturing units.

5.5.1.4 Marketing and Sales

This area focuses strongly upon marketing communications and the promotions
mix. Communication channels can be :
Newspaper Advertisements..
Social Media Marketing.
Demo Cars.
Exclusive Showrooms.

5.5.2 Support Activities

5.5.2.1 Procurement:
This function is responsible for all purchasing of goods, services and materials. Aim
is to secure the lowest possible price for purchases of the highest possible quality.

5.5.2.2 Technology Development:

Important source of competitive advantage. Companies need to innovate to reduce
costs and to protect and sustain competitive advantage.

5.5.2.3 Human Resource Management:

Employees are an expensive and vital resource. It Manages recruitment and selection,
training and development, & rewards and remuneration.

5.5.2.4 Infrastructure: This activity includes corporate or strategic planning. Manufacturing

plants, Machineries, etc

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6 Key Issues and Trends
6.1 Industry Prospects
The Indian automobile market is estimated to become the third largest in the
world by 2016 and will account for more than 5 per cent of the global vehicle
sales. The auto components sector has been observing robust growth, and turnover
is anticipated to reach US$ 115 billion by FY21 from US$ 35.1 billion in FY14.

India's exports of auto components increased at a compound annual growth rate

(CAGR) of 15 per cent to US$ 10.2 billion in the period FY09-14. Europe
accounts for the largest share of Indian auto components exports (38.1 percent)
followed by North America (21 per cent) and Asia (25 per cent). Exports could
account for as much as 26 per cent of the market by 2021.

Favourable government policies such as Auto Policy 2002, Automotive Mission

Plan 2006-2016, National Automotive Testing and R&D Infrastructure Projects
(NATRiPs), have helped the Indian auto components industry achieve
considerable growth.
India is emerging as global hub for auto component sourcing. A cost-effective
manufacturing base keeps costs lower by 10-25 per cent relative to operations in
Europe and Latin America. Relative to competitors, India is geographically closer
to key automotive markets like the Middle East and Europe. Global auto
component players are increasingly adopting a dual-shore manufacturing model,
using overseas facilities to manufacture few types of components and Indian
facilities to manufacture the others.

The Indian automobile industry has emerged as the 7th largest in the world.
According to the Society for Indian Automobile Manufacturers (SIAM), the
automobile industry has already invested Rs 70,000 crores in the past four years in
building new factories, adding fresh capacity and bringing out new products.
The auto components industry too is gearing up to compliment the vehicle
industrys growth. About $6 billion has been invested in the past 4 years
according to Automotive Component Manufacturers Association of India
(ACMA). It is driven by a sustained increase in vehicle population and an
increasing preference towards higher-end vehicles with rising consumer
aspirations (Volvo registered 155% increased growth of its luxury segment in
2012).

6.2 Challenges faced by Industry

According to a recent Automotive industry report by Wipro, in the coming
decade, the main focus would be on enhancing efficiency and productivity, and on
innovation, driven by changing customer demands. Price sensitivity of the Indian
consumer, cost optimization needs of manufacturers and increasing focus on
environmental concerns will drive critical changes in the market.
Future strategies of the auto companies will have to focus on increased
environmental safety concerns, rising fuel prices and cost-effectiveness in the
rising market competition. Innovation has to focus on increasing efficiency and
reducing emissions.

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 Customer experience will be a key factor to retain the existing ones and reach out
to the new ones. After-sales service is an important aspect which will help in
winning the loyalty of the consumer. Overall in- vehicle experience needs to be
upgraded for the consumer by deploying telematics, embedded software and
infotainment in a seamless and user-friendly manner.
According to me, in order to ensure long-term, sustainable growth, auto
companies will need to focus on adopting a three pronged strategy of - investing
in R&D for product development, extending presence to non-auto verticals, and
expanding geographical presence beyond the domestic boundaries. OEMs should
expand service and distribution networks, manufacturing facilities and improve
technological capabilities.
Future investments will need a strong public-private partnership, not only to build
infrastructure for growth but also to combat the counterfeit auto parts market.
A clear roadmap, training of man-power and appropriate regulations with clear
policies regarding safety & emission norms and fiscal policies are required for
longterm planning by the automotive industry. Steps to create an encouraging
environment will help in accelerating and sustaining growth and project India as
the global hub for the auto industry.

7 Future Outlook
Indian automotive industry to grow 3.5 to 4 times of the current value of USD 74 billion
to USD 260 billion to 300 billion.
By 2026, passenger vehicles likely to increase between 9.4 - 13.4 million units,
commercial vehicle between 2.0 - 3.9 million units, two wheeler to grow to 50.6 - 55.5
million, and tractors to 1.5 - 1.7 million units.
India to be among the top three automotive industries in the world.
Contribute over 12 percent to India's GDP.
Generate 65 million more jobs.
AMP aims to make Indian automotive industry to be the engine of 'Make in India'
initiative.
The industry will look to increase exports multifold to reach 35-40 percent of overall
output.
AMP envisages to implement End of Life Policy for automotive vehicles and
components.
BSV norms to be adopted by 2019 and BSVI norms to be implemented 2023 for
passenger vehicle.
Auto Component to grow to Rs 593,500 crore - Rs 732,000 crore.
The industry achieved the targets set in the previous mission document in terms of the
unit sales of passenger vehicle and commercial vehicle were met however, sales figures
of two wheeler was missed.

The Future Growth Drivers

Higher GDP Growth
India's huge geographic spread- Mass Transport System
Increasing Road Development
Increasing disposable Income with the service sector
Cheaper ( declining interest rates) & easier finance Schemes
Replacement of aging four wheelers
Graduating from two wheelers to four wheelers

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8. Attractiveness
Over the next decade, the automotive industry at a global level is likely to see
significant transformation. Principal ones that are expected include the shift of growth
in demand for automobiles from developed nations to developing nations (mainly
BRICS); a dramatic increase in the share of electronics in automobiles making them a
computer on wheels; a relentless pursuit of economies of scale and scope in design
and engineering of automobiles and components, while also pursuing low cost
manufacturing destinations. AMP 2026 envisages that the government and industry
will work together to address all the key issues to take India to its rightful position in
the global auto industrys sweepstakes. AMP 2026 will help Indian Automotive
industry to focus on its strengths and improve its competitiveness in select segments,
achieve the annual production target of ` 1,616,000 cr to ` 1,889,500 cr in terms of its
size and establish its Right to Win on the global stage. By 2026, India could stand
first in the world in production/ sale of small cars, two- and three-wheelers, tractors
and buses, 3rd in passenger vehicles and heavy trucks, all adding up to 12 %
contribution to the national GDP.

9. CONCLUSION
Over the next decade, the automotive industry at a global level is likely to see significant
transformation. Principal ones that are expected include the shift of growth in demand for
automobiles from developed nations to developing nations (mainly BRICS); a dramatic
increase in the share of electronics in automobiles making them a computer on wheels; a
relentless pursuit of economies of scale and scope in design and engineering of
automobiles and components, while also pursuing low cost manufacturing destinations.
AMP 2026 envisages that the government and industry will work together to address all
the key issues to take India to its rightful position in the global auto industrys
sweepstakes. AMP 2026 will help Indian Automotive industry to focus on its strengths and
improve its competitiveness in select segments, achieve the annual production target of `
1,616,000 cr to ` 1,889,500 cr in terms of its size and establish its Right to Win on the
global stage. By 2026, India could stand first in the world in production/ sale of small cars,
two- and three-wheelers, tractors and buses, 3rd in passenger vehicles and heavy trucks, all
adding up to 12 % contribution to the national GDP.

Page 18 of 18