Opportunities For India In The Global Auto Industry

Amit Patankar Aug 16, 2022

There is a definite transformation underway in the global automotive industry. Growing environmental awareness and pollution caused by the depleting reservoirs and increasing costs of fossil fuels (petrol, diesel) are why the global mobility industry is investing in Electric vehicles (EVs) and their infrastructure. International geopolitical situations push fuel prices, increasing consumers' urgency to buy electric vehicles. Despite the supply chain shortage, the EV market is growing steadily.

Governments are setting targets of going 100 per cent EV in the next few years. EVs seem to answer the quest for cleaner energy and low driving costs. However, there are a few challenges the car makers are trying to overcome and are investing millions in research. How can India play a vital role in the global auto industry? What are the opportunities for India in the global automotive industry? This is a summary from a passionate domain expert studying the field of future mobility, design, and innovation.

Global Megatrends

To understand India's role, let's look at the big picture - the global megatrends. The automotive industry in 2022 has been marked by a recovery from the pandemic, intensified competition, and innovation-driven growth. As a combination of factors like these, globally, these four distinct megatrends are emerging in the automotive industry.

Electrification: demand for electric vehicles EV's and charging infrastructure.

Sustainability: Constant effort by automakers to find new, alternative materials and technologies to achieve sustainability and reduce the overall environmental footprint.

Smart Vehicles: autonomous driving technology and connected vehicles are considered the following big things in the automotive industry.

New consumer behaviours: Not the least, shared mobility and last-mile delivery services.

At both domestic and global levels, India has a considerable growth potential to develop in the automotive industry. The domestic automotive market is unique to the rest of the world, with infrastructure still growing with a unique blend of 2-wheelers, cars, and trucks on Indian roads. Whereas, at a global level - India can be a hub for technological development and the manufacture and export of hardware, components, and vehicles. A unique market needs unique solutions.

The Sustainability Factor

Car makers are investing significantly to develop new ways to recycle, reuse, and reduce their carbon footprint. India can set an example by scrapping old vehicles that don't pass fitness/emission tests. Recycle ageing cars and reuse the material from them, such as steel, plastic, rubber, and aluminium. This will reduce pollution, make way for newer vehicles that run on cleaner fuel, help the environment, and promote the development and sale of new vehicles. The effect is reduced crude oil imports. India is well-known for sectoral expertise in the handloom and fabric industry. 'Handmade in India' is one of our most successful slogans on account of the uniqueness of the craft and the reasonable costs. When the automotive world is looking for more sustainable materials, we have an excellent opportunity to celebrate natural materials like jute, cotton fabric, and natural dyes. Global automakers have a renewed interest in these 'vegan' and more sustainable alternatives to traditional leather and vinyl.

Electrification of Vehicles and the India Factor

At a domestic level, there's a need to create awareness of the importance of EVs. Consumers need to understand how EVs work to set the right expectations on recharge time and costs. The US EV market is dominated by trucks, SUVs, and higher-performance cars like the Ford F150 lightning truck, Ford Mach E, Rivian R1T, and the highly anticipated Tesla Cyber Truck. Private-Public partnerships have pledged to create 500k more charging touchpoints around the country within the next five years. The Indian market is much different from the USA or Europe market. We have a high demand for smaller vehicles and two-wheelers and a massive public transport network - trains and buses. Without drastically improved roads and infrastructure, more cars will not be the right solution for India.

Imagine a time when we could have 1 billion cars on Indian roads. Scary right? Public transportation is, therefore, the future. India should develop faster, more fuel-efficient trains and other public transportation. More EVs will need more charging stations alongside the highways, which needs provisioning in the road and highways development plans. While incentivized EV purchases can help reduce the number of fossil fuel-driven cars on Indian roads, improving the service model and public transport carriers will reduce the number of vehicles. This could also open new export opportunities.

Indian Skilled Workforce

Autonomous mobility and connected car technology is a fast-developing technology, and India can play a considerable role here by providing software solutions domestically and globally and becoming a hub for the future-driven market. As against global giants like Japan and Germany (10 per cent), India spends less than 1 per cent of her GDP on technical R&D. Government incentives like the Science and Technology Innovation Policy 2020 can help boost R&D in the auto and components manufacturing industry, which can lead to increased production for new segments such as compact SUVs, small hatchbacks, and two-wheeler EVs.

It is no secret that the IT sector in the USA is dominated by Indian talent. India can leverage its skilled workforce in the IT sector and become a developing partner of Data analytics, IoT (internet of things), machine learning, & Artificial Intelligence - the fundamental skills of the automotive industry in the 21st century. This can also be leveraged at a domestic level. India has a skilled workforce, and with industry-specific training, India can attract more companies to shift their manufacturing bases in India, like Daimler Chrysler, BMW, Hyundai, and Toyota. Constant industry and academic engagement are also needed to help India sharpen its skilled workforce.

The Cost Factors

Cost efficiency will be a driving factor in the future of the automotive industry globally and not just in the Indian economy. India has all the resources and skillset to create great products for much cheaper than most countries. The manufacturing process needs drastic change to make them affordable to make and drive. For example, Tesla has changed the efficiency of manufacturing and assembling electric cars, and other automotive giants are trying to catch up. The PSLV space program by ISRO and the 2014 launch had a smaller budget than the Hollywood blockbuster - Gravity - while also launching four other foreign satellites into orbit.

India has a vast potential to make EVs with a higher range at cheaper costs. India has the youngest population in the world, and the talent in technology is abundant. The government is promoting start-ups, and campaigns like 'make in India' seem to make a difference. The 2W EV market has enormous growth potential, and many start-ups in India are already tapping into it. Additionally, India has abundant natural resources to harvest and generate other renewable energy, such as hydroelectric, solar, and wind power. In conclusion, with all the skilled and natural resources, and combined efforts of government, industry, and academics, India's prospects in the global auto industry are looking very optimistic.