Until the late 1980s, with emphasis on indigenizing parts and assemblies, limited models manufactured by Hindustan Motors, Premier, and Mahindra & Mahindra were available in petrol and diesel. The new revolution started with the entry of Maruti Cars in India in 1983. It was a purely supply-driven market.
Post-liberalization Phase in Indian Passenger Car Industry
The 1990s started with a significant slowdown in the economy during 1991. The government liberalized the economy; thus, a shift from mere indigenization to efficiency and better designs started.
Post-liberalization, car makers previously not allowed to invest in the Indian market arrived in the country. Maruti & Suzuki joint venture, Toyota and Kirloskar joint venture, Hyundai, and Honda expanded their base in the country.
Around this time, LPG and Natural Gas were introduced as alternate fuels.
Expansion of the Automotive Industry
2000-2010, the automotive industry was fully delicenced, with the free import of Automate components and 100%FDI allowed. Almost every major car company expanded its presence in India by establishing manufacturing facilities nationwide.
Focus on exports of automobiles from India
Maruti Suzuki was among the first car brands to ship vehicles to major European Markets. During this decade, the Indian Government introduced mandatory Emission Norms Bharat stages 3&4 based on stringent European Norms, implemented in major cities to reduce vehicle pollution. India became the 3rd Largest exporter of cars in Asia.
EV Projects
During 2011-2020, India became the sixth-largest country in the world in terms of production. The government's Automotive Mission Plan 2016-26 set an aspiration to make India an Automobile Manufacturing Hub for the global market. Guidelines on quicker adoption of EVs by facilitating affordable charging infrastructure and ecosystem were introduced. Tata, Force Motors, Morris Garage, Audi, MG motors, BYD-Olectra, Ashok Leyland, Hyundai, SAIC Motor, Mercedez Benz, Mahindra, and KIA motors announced their investment in EV Projects and collaborations amounting to over 25000crores.
The COVID-19 pandemic stalled production and overall economic activity.
Current Scenario
Post Covid 19, the market is stabilizing, shrugging off the impact of a pandemic.
Major trends observed are:
Increased Demand for MPV'sand SUVs
People prefer to buy MPV'sand SUVs over sedan cars leading to many new launches of MPV and SUVs
Microprocessor Chips Shortage
Most of the major brands of leading automobile companies are in short supply, with customers having to book their cars and wait for a while before they get delivery. The shortage in the supply of passenger vehicles/SUVs is being attributed to the supply of microprocessor chips which have been further hit by the Russia-Ukrain war.
The measures taken to mitigate the impact of microprocessor chip shortage are :
- Ministry of Electronics and Information Technology has developed a program called SEMICON - A program aimed at attracting semiconductor companies, such as Intel, AMD, etc., to fabricate and manufacture electronic chips in India
- The government has announced a new incentive scheme worth 76000 crores to boost the semiconductor ecosystem in the country
- Automakers have tried to reduce the effects of the crisis by reducing or even shuttering the production of unpopular/less-demand models.
Prioritization of Environmental Issues and Sustainability
Environmental Pollution Monitoring & Control is one of the major Environmental priorities in India. The major initiatives by the government are:
- scraping policy for 10 & 15-year-old petrol and diesel cars
- Introduction of ethanol mixed E-20 fuel for cars
- Accelerating EV adoption in India- Many auto manufacturers have already invested in this project
- Focus on becoming a superpower in the production of Green- Hydrogen
With priority implementation of this, In the next five years, the Maximum number of vehicles will be based on the above fuel/EV. It is time for auto dealers to shift from the traditional service set-up and suit/shift the infrastructure, ensuring process changes.
This article was contributed by our expert Balakrishna B V
Frequently Asked Questions Answered by Balakrishna B V
1. What are the reasons behind the microprocessor chip shortage in the Indian automotive industry?
- The covid-19 pandemic led to a global shortage of semiconductor chips
- The demand for semiconductors has increased tremendously, and the existing production capacity is unable to keep up
- Taiwan produces over 60% of the world's semiconductors and over 90% of the most advanced ones—the China-US Trade War and 2021 Drought in Taiwan.
2. What are the future projections for EV adoption in the Indian passenger car market, and how does it contribute to India's goal of becoming a global hub for automobile manufacturing?
Governments have made clear policies for EVs under the FAME scheme to achieve 30% EV sales penetration for cars, 70% for commercial vehicles, 40% for Buses, and 80% for two and three-wheelers by 2030.
Most of the Manufacturers have already invested in the EV project in India.
3. What are the key challenges faced in terms of charging infrastructure and ecosystem development for EVs in India?
Two main challenges for EV Charging Infrastructure are:
- Building enough charging stations in the right locations
- Having the electric grid to support its trouble-free operation further
4. How are automotive manufacturers in India incorporating Green Hydrogen technology into their vehicles as part of the passenger car revolution?
The government has a big ambitious and serious plan on Green Hydrogen. This is still in the initial stages. Toyota, BMW, Hyundai, and Honda are already working on this project.
5. What are the advantages and barriers of using Green Hydrogen as a fuel source in the Indian automotive industry?
Advantages
- No Vehicle Emissions other than water vapour
- Fuel Economy is equivalent to about twice that of gasoline vehicles
- Hydrogen is abundant and can be made from renewable energy
Barriers
- High costs of hydrogen extraction
- Overall cost and hydrogen storage
- Infrastructure, as hydrogen is a highly flammable fuel source
