India's automobile sector is looking for major expansion next year, driven by supportive government policies and a strong employment market, a recent report states.
The central driver of such growth is the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) plan, introduced as of April 2019.
This plan grants financial and non-financial support at the state level to induce the mass promotion of electric vehicles (EVs), thus helping the development of the sector.
According to a report by data analytics company GlobalData, approximately 24.7% of Indian cities are likely to see robust growth in the automotive industry, while 49.5% are likely to see moderate growth. Large cities like Mumbai, Hyderabad, and Pune are some of the ones that are likely to see this growth.
Yet not all areas are poised to prosper. While 7.5% of cities can expect stagnant growth, an estimated 9.7% can expect moderate declines, and 15.5% can expect more dismal downturns. Chandigarh is one of the cities that are likely to face difficulties in automotive growth.
Conversely, Hyderabad and Mumbai are placed to achieve strong growth, mainly because of their growing service sectors and increasing job opportunities. Hyderabad, especially, has experienced increased job generation, facilitated by the government policies that encourage entrepreneurship and start-ups. The state focus on information technology (IT) and IT-enabled services (ITES) has also enhanced the employment base.
Improvement in infrastructure, such as developments in roads, transport networks, and electricity supply, has also enhanced the appeal of these cities to businesses and employees, contributing further to demand in the automobile sector.
A survey conducted in 31 key cities indicated that the expansion of the workforce has been the key driver of automobile demand.
While the overall situation in the auto sector is favorable, regional forces influence market development a great deal," stated Madhuchhanda Palit, Automotive Analyst at GlobalData.
She underscored that influences such as growth in the service industry, job availability, industrialization, and dynamic state government initiatives play key roles in driving the direction of the industry across regions.
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