Automobiles are a major trade commodity in India. The country is a leading supplier of both domestic and commercial vehicles to many developing nations worldwide. The Government of India has taken steps to solidify its position in the global market further.
Native demand is also considerable, as India is the world’s third-largest automobile market. Many companies have invested heavily in this market and have set up shop here. Affordable labor and lower production costs are just some of the favorable factors that make this a preferred manufacturing location.
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Government Initiatives to Boost Automobile Exports
India’s leaders have undertaken a lot of measures to promote India’s automotive exports and boost the economy. The demand for vehicles is at an all-time high in developing countries and shows no signs of slowing down in the mid to long term.
Reliable transportation serves as s fundamental infrastructure for commerce and is an important step for economic growth.
Here are some of the schemes and policy decisions adopted by GOI since 2015 to boost exports:
- The Foreign Trade Policy of 2015-20 has been extended to 31 March 2023.
- The Interest Equalization Scheme has also been extended till 31 March 2024.
- Trade Infrastructure for Export Scheme (TIES) and Market Access Initiative Scheme (MAI) had provisions for automotive exports.
- The suspension of the Duties and Taxes on Exported Products (RoDTEP) scheme in Feb 2023 that had been implemented since Jan 2021.
- Finally, a common digital platform for issuing Certificates of Origin was launched to increase the utilization of the Free Trade Agreement by exporters.
Promising Results in FY 2022-2023
These are some major steps undertaken by GOI to bolster automotive exports. Setting up these systems and incentives made trade more lucrative for exporters and attractive for importers.
The total passenger vehicle exports stood at 6,62,891 units by the end of March 2023. A significant rise from last year’s 5,77,875 units exported from the same period in 2021-22. Maruti Suzuki led the market, followed by Hyundai Motors and Kia. Nissan Motors, Volkswagen, Honda, and Mahindra were the next most prominent companies.
Significant Decline in Q1 2023-24
Many African countries are the prime importers of Indian automotive and utilize the bulk of these vehicles. Unfortunately, the continent is currently facing currency devaluation and is focusing on ensuring the essential needs of its people. With the current state of climate instability and political tensions, a massive strain is being put on developing countries.
Many experts are fearing food insecurity, and even developing countries are just now slowly coming out of recession. That’s why Indian automotive saw a 28% decline in exports despite a massive surge in demand.
Yearly Side-by-side Comparison Q1 2022 & 2023
1. Passenger Vehicles: 2023 = 1,52,156; 2022 = 1,60,116
2. Passenger Cars: 2023 = 94,793; 2022 = 1,04,400
3. Utility Vehicles: 2023 = 55,419; 2022 = 55,547
4. Two Wheelers: 2023 = 7,91,316; 2022 = 11,48,594
5. Three Wheelers: 2023 = 73,360; 2022 = 97,237
6. Commercial Vehicles: 2023 = 14,625; 2022 = 19,624
As you can see, each category faced a decline due to the currency devaluation in Africa and the situation will likely continue till Q3 of the current fiscal year.