Research Report: Automobile Sector — India Overview

1. Executive Summary

The Indian automobile industry has long been a reliable barometer of economic performance, given its critical role in
both macroeconomic expansion and technological advancement. In the sector, the two-wheeler segment dominates in
terms of volume, driven by a growing middle class, a predominantly young population, and rising demand from rural
markets.
Demand for commercial vehicles has also strengthened, supported by the expansion of logistics and passenger
transportation services. Market growth is expected to be shaped by emerging trends such as vehicle electrification,
particularly in three-wheelers and small passenger cars.
India has also established itself as a prominent auto exporter with strong growth prospects in the near future.
Automobile exports rose 19% in FY25 to over 5.3 million units, led by robust demand for passenger vehicles, two-
wheelers, and commercial vehicles in global markets.
Government initiatives such as the Automotive Mission Plan 2026, the scrappage policy, and the production-linked
incentive (PLI) scheme are expected to position India as a global leader in both the two-wheeler and four-wheeler
markets.

Shifting consumer preferences, the industry continues growing with structural transformation driven by rising
electrification, new business models, and expanding emerging-market demand. India’s automotive ecosystem is rapidly
evolving from a traditional manufacturing base to a future-oriented mobility hub with strong export momentum,
investments, and EV adoption. Globally, electrification, regional policy shifts, and competitive pressures define the
sector’s near- and medium-term trajectory.

2. Market Size

India has a strong position in the global heavy vehicles market as the largest tractor producer, second-largest bus
manufacturer, and third-largest heavy truck manufacturer in the world. In FY25, the country produced 3,10,34,174
passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles. In June 2025 alone,
production. Two-wheelers and passenger vehicles dominate the domestic market, with respective shares of 76.57% and
16.80% in FY25. Passenger car sales are largely concentrated in the small and midsized segments.

Numbers of Automobiles Produced in India (in million)

30.92 31.03
29.07 28.43
25.33 26.36 25.93
22.65 23.04

FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25

Number(Units)
 Number of autombile sold in india(in million)
30
25
20
15
10
5
0
FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25

Number of autombile sold in india

Shares of each segment in total production Volume in FY 25

4% 2%
17%

77%

Two wheelers Passenger vechiles Three wheelers Commercial Vehicles

The electric vehicle (EV) market in India is emerging as a significant growth driver. India achieved a milestone with the
sale of 1,00,000 EVs in FY24, up from 82,688 units in FY23. A study by CEEW Centre for Energy Finance identified a US$
206 billion opportunity in the Indian EV sector by 2030, requiring an estimated US$ 180 billion investment in vehicle
manufacturing and charging infrastructure. Supporting this outlook, NITI Aayog and the Rocky Mountain Institute (RMI)
project India’s EV finance industry to reach US$ 50 billion (Rs. 3.7 lakh crore) by 2030. Meanwhile, the India Energy
Storage Alliance estimates the EV market will grow at a CAGR of 36% between 2018 and 2026, with the EV battery
market expected to expand at a CAGR of 30% during the same period.

2. Performance & Structure

2.1. Industry Scale & Segments
 The Indian automotive industry is one of the largest in the world:
 Largest producer of two-wheelers, world’s largest tractor manufacturer.
 Second-largest bus manufacturer and third for heavy trucks.
 Passenger & commercial vehicle industry contributes significantly to GDP and manufacturing output.
 Production volumes in FY25: ~310 million vehicles (all segments combined).

Market Breakdown (FY25):

 Two-wheelers ~76.6% share
 Passenger vehicles ~16.8% share
 Commercial & three-wheelers: remaining share.

2.2. Recent Performance (2025)

 Strong industry performance in 2025:
 Automobile exports rose ~24%, indicating robust global demand for Indian vehicles.
 Motorcycle exports hit post-COVID records (4.3M units, +27% YoY).
 Carmakers recorded strong December 2025 sales (+26.8% YoY).
 OEMs like Skoda India recorded significant sales growth (+107%).
  Government economic reports indicate sustained growth momentum supported by domestic demand,
manufacturing rebound, and rural consumption.

2.3. Investment & Policy Environment

 The industry is attracting large investments: Maruti Suzuki alone plans ~USD 3.9B plant in Gujarat.
 Policy support includes: Automotive Mission Plan, PLI schemes, and EV-focused incentives like PM E-DRIVE to
accelerate electrification and infrastructure build-out.
 Foreign direct investment (FDI) inflows have been significant (~USD 29B between 2000–25).

3. Global Automobile Sector: Performance & Trends

3.1. Market Size & Growth Trajectory
 Global automotive market size (2025): ~USD 2.75 trillion; projected to reach ~USD 3.26 trillion by 2030 (CAGR
~3.5%).
 Global car production in H1 2025 grew ~3.5%, led by Asia’s dominance (>60% of output).
3.2. EV Revolution & Future Powertrain Shift
 Electrification is reshaping the industry:
 EV sales globally expected to surpass 20 million units in 2025, ~25% of all car sales.
 Global EV market value set to exceed USD 2.1 trillion by 2032 (CAGR ~13.2%).
 China is a key global EV driver — accounting for >50% of EV sales and production, with Chinese brands like BYD
dominating global EV rankings.

4. Future Growth Outlook

4.1. India (2026–2030)
 Passenger vehicle sales projected to grow to ~7.5M units by 2030 (CAGR ~5.7%).
 Two-wheeler segment expected to grow 6–8% annually to 2030.
 EV industry in India could become a ~USD 234B opportunity by 2030, creating ~50M jobs.
 Continued infrastructure build-out and policy support could lift EV penetration toward global averages.
4.2. Global (2025–2030 & Beyond)
 Automotive market growth to continue at ~3.5% CAGR through 2030.
 EV market expansion remains a structural growth force with long-term projections into the early 2030s
exceeding USD 2 trillion.
 Shift towards software defined vehicles (ADAS, autonomous features) and sustainable mobility models will
shape future product portfolios.

5. Key Growth Drivers

The Indian automobile sector is supported by strong structural growth drivers. Rising income levels, urbanization, and
low vehicle penetration continue to fuel long-term domestic demand across passenger vehicles, two-wheelers, and
commercial vehicles.

Government support through PLI schemes, EV incentives, and 100% FDI has strengthened manufacturing
competitiveness and investment inflows.

Electrification is emerging as a major growth catalyst, particularly in two-wheelers and fleet segments, supported by
falling battery costs and expanding charging infrastructure. Infrastructure development and logistics expansion are
driving sustained demand for commercial vehicles, while improving access to vehicle financing is expanding the
addressable customer base.
Premiumization trends, export growth, and a robust auto-component ecosystem are enhancing revenue visibility and
profitability. Collectively, these factors position the Indian automobile sector for sustained long-term growth.
Export Growth & Global Supply Chain Integration India is emerging as a strategic export hub for both vehicles and auto
components. Competitive labor costs, improving quality standards, and scale efficiencies have enhanced India’s export
attractiveness. Rising exports to Africa, Latin America, ASEAN, and Middle Eastern markets are reducing dependence on
domestic cycles. Global OEMs increasingly view India as a sourcing base for compact cars, two-wheelers, and
components.

Shift in Consumer Preferences & Premiumization Indian consumers are increasingly moving toward higher-value
vehicles. Rising demand for SUVs, feature-rich vehicles, and premium two-wheelers is driving value growth faster than
volume growth. Increased focus on safety, connectivity, and comfort has lifted average selling prices (ASPs). Brand
differentiation and product refresh cycles remain strong growth levers.

Robust Auto-Component Ecosystem India’s auto-component industry is a key enabler of sectoral growth. Increasing
localization of critical components reduces import dependence and enhances supply chain resilience. Component
manufacturers are moving up the value chain into electronics, EV parts, and precision engineering. Strong linkages with
global OEMs enhance export opportunities.
Strong multiplier effect on manufacturing, employment, and innovation.

Demographic Advantage & Workforce Availability India’s young population and growing workforce support long-term
mobility demand. A rising working-age population increases vehicle ownership and commercial mobility needs.
Availability of skilled engineering and manufacturing talent supports innovation and cost efficiency.

Indian Chemicals Industry Analysis

Executive Summary
The global chemicals and petrochemicals industry is one of the major sectors that’s even after being a complex one plays an
integral component in the global economy and supply chain network.
It is one of the world’s major sectors, both in scope—owing to the extensive use of chemicals in everyday items, coupled with
the great variety of chemical products accessible—and the revenue it generates from international trade.
As Asia continues to be the leading market for the chemical industry, India is poised to become a global manufacturing hub in
the years to come. The chemical and petrochemical sector contributes over 9% to manufacturing gross value added and 7% to
total exports.
One of the largest worldwide, India’s chemical industry ranks sixth in production and 14th in exports. It is also the second
largest manufacturer and exporter of dyes, third largest consumer of polymer and fourth largest producer of agrochemicals
globally.
Manufacturing over 80,000 different varieties of chemical products, it is also one of the most diverse industries in the
country. Moreover, it provides raw materials to various end-use sectors and serves as a pillar in the nation’s development and
journey towards self-sufficiency.

Chemical industry’s contribution to India’s economy

India is one of the leading chemical exporters globally. The sector is a crucial part of the country’s manufacturing industry,
with direct and indirect linkages to most industrial segments, including agriculture, food and beverages, textiles, rubber and
petroleum refining. The chemical sector’s share of Gross Value Added (GVA) in the manufacturing sector in FY 2021-22 is
about 9.2% at current prices. GVA of the chemical sector has grown with a CAGR of 8.3% from FY 2016-17 to FY 2021-22.

It employs over two million people and exports to over 175 countries. With a 6% share in the total exports , the sector
exports products such as inorganic and organic chemicals, dyes, agrochemicals, plastics, synthetic rubber, filaments and more.

Between April 2000 and March 2024, FDI inflows to the chemicals sector (excluding fertilizers) totaled $22.146 billion.
Moreover, the industry is projected to receive further investments amounting to ₹8 lakh crore by 2025. India is looking
towards a sustainable future. It has established itself as a trusted manufacturer and global supplier of dyes, dye intermediates,
basic chemicals, agrochemicals, cosmetics, toiletries, castor oils and other chemical products.

The chemical industry plays a significant role in the nation’s commitment to green technology and net-zero emissions by 2070.
By streamlining regulatory processes and building a strong infrastructure to support its net zero/climate, the nation is well on
its way to becoming the leader of chemical manufacturing.

Market Size of Indian Chemical Sector (US$ bil-

lion)
350
300
300 278
254
250 233
213
195
200 178

150

100

50

0
2019 2020 2021 2022 2023 2024 2025

Key investment opportunities and trends

India’s chemical sector is one of the fastest-growing industries globally and its exports reach 175 countries. It exported
chemical products worth approximately $20 billion to its prominent export destinations such as China, the US, Brazil, the
Netherlands and Saudi Arabia. India’s chemical industry offers several products and opportunities to build scalable businesses
across several segments, such as specialty, inorganic and petrochemicals.

Specialty chemicals: With growing domestic demand and the global trend of embracing sustainable practices and
decarbonising, there is an increasing demand for specialty chemicals. Overall, the specialty segment is the strongest pillar of
the industry.

The demand for specialty chemicals has correspondingly increased due to rising domestic and global demand in electronics,
automotive, construction, aerospace, food and pharma sectors. The speciality chemical sector accounts for 47% of the
nation’s domestic chemical market and is projected to increase at a CAGR of nearly 11% over the next five years. Meanwhile,
agrochemicals – a specialty chemical sub-segment, is currently a $5.5 billion market and poised to account for ~40% of India’s
overall chemical exports by 2040.

Petrochemicals: India’s petrochemical capacity is projected to increase from approximately 29.62 million tonnes to 46 million
tonnes by 2030. The government’s initiative to establish Petroleum, Chemicals & Petrochemicals Investment Regions (PCPIRs)
and 10-plus plastic parks is priming India for a big leap in the petrochemical industry. PCPIR strategy aims to attract
investments worth $420 billion within the sector. PSUs like ONGC and BPCL and private players like Haldia Petrochemicals
have committed approximately $45 billion to various petrochemical projects.

As polymer demand is set to outpace domestic capacity addition in the next decade, there’s an opportunity for investments in
the industry to build capacity for a larger global role.

Growth drivers
Domestic demand and strategic efforts to enhance self-sufficiency have resulted in an unprecedented surge in the industry’s
market value. Estimated to be worth $300 billion approx in 2025 and projected to reach $350 billion by 2028 , the chemical
industry is a major contributor to India’s economic growth.

A Mckinsey report titled “India: The next chemicals manufacturing hub” has estimated that the Indian chemical industry will
grow by 11-12% during 2021-27 and by 7-10% during 2027-40—increasing its global market share by three times by 2040.
This growth, the report emphasised, will be driven by:

 Rising domestic consumption: It plays a foundational role in multiple end user industries, including but not limited to
agriculture, pharmaceuticals, automotive, electronics, construction and more. Nearly 70% of India’s chemical
production is consumed domestically. India is poised to account for 20% of incremental global consumption of
chemicals over the next two decades, with domestic demand expected to increase to $850-1,000 billion by 2040
 Changing consumer behaviour: The demand for ecofriendly/sustainable products is gaining momentum worldwide
and India is poised to benefit from this upsurge. It is one of the leading producers of the chemicals required for
producing such products
 Evolving supply chains: Several geopolitical factors affect the global supply chain for chemicals and petrochemical
products. Manufacturers are seeking new markets to strengthen their supply chains. Here, India, with its value
proposition, can emerge as a trusted partner
 Government intervention: Policy reforms and incentive schemes like Remission of Duties and Taxes on Exported
Products (RoDTEP) , Production-Linked Incentive (PLI) , along with initiatives like Petroleum, Chemicals and
Petrochemical Investment Region (PCPIRs) , and Plastic Parks are contributing significantly towards the industry’s
growth.
 Others: India’s low manufacturing costs, skilled workforce and natural resources, combined with the nation’s
commitment to adhering to and adopting sustainability practices throughout the supply chain, provide distinct
advantages in the global value chain.

Investments and Recent Developments

A few recent developments/investments in the Indian chemical sector are as follows:

 In FY26 (April-July 2025), exports of organic chemicals stood at US$ 2,750.32 million & inorganic stood at US$ 726.25
million.
 Imports of organic chemicals were US$ 5,301.48 million) and inorganic chemicals US$ 2,225.51 million from FY26
(April-July 2025).
 In FY26 (April-July 2025), imports of castor oil, essential oil, and cosmetics and toiletries stood at US$ 987.94 million.
 Exports of castor oil, essential oil, cosmetics and toiletries are US$ 1,446.15 million during FY26 (April-July 2025).
 In FY26 (April-July), the export of agrochemicals was US$ 1,433.89 million, dyes were US$ 765.26 million and the
other dye intermediates were US$ 59.51 million.
 The import of agrochemicals was US$ 798.16 million; dyes were US$ 108.86 million and the other dye intermediates
were US$ 536.02 million during FY26 (April-July).
 In 2024, Alkali chemicals stood at 71% of the total chemical production.
 After three years of discussions, the UK and India have finalized a landmark Free Trade Agreement (FTA). The
agreement removes tariffs on 99% of Indian exports and reduces duties on 90% of UK exports to India, with the
chemical industry standing out as one of the major winners.
 Kanoria Chemicals commissioned a new Ankleshwar plant on September 6, 2024, at a total cost of Rs. 90 crore (US$
10.22 million) financed to add 345 TPD of formaldehyde and 18 TPD of hexamine, thereby supporting the automotive,
construction, agriculture, cosmetics, and chemical industries with efficient, sustainable production facilities.
 Tata Chemicals intended to invest about Rs. 8,000 crore (US$ 967.45 million) by 2027 as capex on an expansion spree
that includes scaling businesses sustainably.
 New manufacturing plants are being planned to be launched in 2026 to increase capacity, for example, Shivtek
Spechemi Industries has opened a new chemical plant near Hazira, Gujarat, covering over 1 million sq ft. aiming to
boost production capacity to 2,50,000 MTPA by 2027-28.
 Sudarshan Chemical announced the acquisition of Germany’s Heubach Group on October 11, 2024, and completed
the deal in March 2025. This acquisition created a global pigment leader with operations across 19 sites worldwide,
strengthening Sudarshan’s portfolio and global presence across Europe, the Americas, and Asia.
 In June 2025, Aditya Birla Group acquired Cargill’s specialty chemicals manufacturing facility in Dalton, Georgia, USA.
This strategic move marked Aditya Birla’s entry into the US chemicals market and highlighted the growing ambitions
of Indian chemical companies to expand internationally through acquisitions.

Outlook for India’s chemical industry

Recently, chemical companies in India have prioritized expansion and capital excellence, one of the primary reasons the
industry is robust and growing at its staggering speed. Global MNCs like Lubrizol, Celanese and Nouryom have established
technical and global capability centers in India along with greenfield manufacturing plants.

The nation’s chemical industry is firmly and sustainably accelerating towards decarbonization and proactively investing in R&D
and innovative technologies with streamlined functional excellence and increased profit margins.
Major petrochemical companies have allocated significant CAPEX to expand and develop R&D infrastructure. In FY 2022 alone,
approximately ₹600 crore was invested in R&D by major chemical companies.

The growing global demand for sustainable chemical products offers India a growth opportunity. The specialty chemicals
subsegments will drive growth in the coming years, with an 80% share of India’s chemical exports.