The Current Status
- India ranks number Two globally in the two-wheeler segment next only to China.
- India ranks 11th in car production and 13th in commercial vehicle production globally.
- According to the International Yearbook of Industrial Statistics 2008 released by United Nations Industrial Development Organisation (UNIDO), India ranks 12th in the list of the world's top 15 automakers.
- With increasing industrial production and growing spending power of the Indian middle class households, the country is expected to make it to the top five markets in the cars and commercial vehicles segment by 2020.
- The Indian Automotive Industry after de-licensing in July, 1991 has grown at a spectacular rate of 17% on an average for last few years. The industry has now attained a turn over of Rs. 1,65,000 Crores (34 billion USD) and an investment of Rs. 50,000 Crores. Over of Rs. 35,000 Crores of investment is in pipeline. The industry is providing direct and indirect employment to 1.31 Crores people. It is also making a contribution of 17% to the kitty of indirect taxes.
- India's current share is about 1.6% of world production as the total number of passenger car being manufactured in the world is 60 million against the installed capacity of 90 million. Similarly, export constitutes approximately 0.3% of global trade.
- Current Production: Although the sector was hit by economic slowdown, overall production (passenger vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09. Passenger vehicles increased marginally from 1.77 million to 1.83 million while two-wheelers increased from 8.02 million to 8.41 million.
- From bicycles to battle tanks "B to B", everything that moves is manufactured at Chennai. With 6 car projects namely Ford, Hyundai, BMW, Renault, Nissan and Mitsubishi-HM, Chennai is now emerging as one Top 10 Global Automobile manufacturing centers. By 2010-11, Chennai will have an installed capacity to produce 12,80,000 cars and about 3,50,000 commercial vehicles each year. This translates to 3 cars output every minute and one Commercial vehicle every 75 seconds. During 2008-09, Chennai produced 5.60 lakhs passenger cars accounting for 30.6% of India's production.
- Exports:India has become a very cost-effective manufacturing hub for automobiles. The export in automotive sector has grown on an average CAGR of 30% per year for the last five years and has reached a turnover of 8 billion USD. During 2007-08, the export earnings from this sector are Rs.16093 Crores (3.53 billion US $ out of which the share of auto component sector 1.8 billion US$). According to the Society of Indian Automobile Manufacturers (SIAM), automobile sales (including passenger vehicles, commercial vehicles, two wheelers and three-wheelers) in the overseas markets increased to 1.53 million units in 2008-09 from 1.23 million units in 2007-08. Export of passenger vehicles increased from 218,401 in 2007-08 to 335,739 units in 2008-09. The growth in export was led by Hyundai Motor India, followed by others such as MSIL, Mahindra Renault, Fiat India Automobiles, General Motors India and Honda Siel Cars India. Chennai has become the largest export hub for automobiles and components in India. During 2008-09, Chennai exported 146,000 cars to 103 countries, mainly EU.
- There is a potential for much higher growth in the domestic market due to the fact that the current car penetration level in India is just 7 cars per thousand. The increase in purchasing power at the top echelon of about 300 million people in the country, where the per capita income is over US $ 1000, implies that passenger car growth in the domestic market is on the verge of a major and sustained boom. According to an Ernst & Young analysis, passenger vehicle sales in the country will grow at a CAGR of 12 per cent to touch 3.75 million units by 2014 as against 1.89 million units at the end of 2008-09. While domestic market is expected to contribute 2.75 million units to the total tally, the remaining 1 million units would contribute towards exports.
- As per estimates by CARE Research, the domestic two-wheeler sales will grow at a CAGR of 8.8 per cent by 2014 at 11.3 million units vis-a-vis 7.43 million units in 2008-09.
- According to Automotive Mission Plan (AMP) 2006-2016, India is set to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016.
Why Tamil Nadu?
- Traditionally, Tamil Nadu is known automobile Manufacturing. Started in 1840, Simpsons pioneered India's automobile industry rail coaches, motor cars, diesel engines and steam passenger buses. In 1948, Ashok Leyland was started for assembly of Austin cars. The Integral Coach Factory (ICF) was established in October 1955. In 1960s, TVS Group established a number of auto components manufacturing plants.
- Chennai has emerged as India's largest automobile and auto components exporter in India. Hyundai has made Chennai the manufacturing and export hub for its small cars. The 'i10 and i20' are being manufactured only in Chennai and exported to the world. Chennai is Hyundai's largest base outside Korea.
- Studies by Hyundai, Nissan and Ford found Tamil Nadu the most cost-effective location for manufacturing cars. Hyundai made Chennai as the "Global Export Hub for Small cars". . During 2007-09, India's total export of automobiles was Rs.8861.33 Crores. Of this, Chennai alone exported Rs.4733 Crores (53.41%).
- Caterpillar USA, Komatsu & Koebelco, Japan and Doosan South Korea chose Chennai to establish large earth moving equipment manufacturing plants.
- Tamil Nadu has the largest auto components industry base. Currently, Tamil Nadu accounts for above 32% of India's production capacity. Automobile manufacturers operate "Just - in-Time" avoiding inventory costs.
- Abundant availability of skilled manpower in Automobile Engineering - Largest turn-out of skilled manpower in India.
- Excellent Port Logistics: Two modern ports in Chennai and one in Tuticorin, providing Gateway for exports and imports. Chennai container terminal is the most efficient in India. Chennai Port has dedicated berth for automobile exports.
- Attractive Package of Incentives depending on the size of Investment and employment as per Industrial Policy 2007.
- Super-mega Policy - Government offers special incentives for projects with investments between Rs.1500 to 4000 Crores.
- Government brought out a very innovative Policy "Ultra Mega Policy for Integrated Automobile Projects" that offers a very attractive package of support to automobile projects investing more than Rs.4000 Crores. As a result of this Policy, since May 2006, investments attracted by Tamil Nadu is automobiles & components manufacturing is Rs.21900 Crores, almost 5 times of the Investments attracted during previous 15 years (May 1991-April 2006). The total employment potential in these new projects is:1.20 lakhs (direct + Indirect).
- Single window facilitation through Guidance Bureau.
- Land allotment in different Industrial parks and SEZs. SIPCOT has promoted 2 SEZs for Engineering products including automobiles.
- Infrastructure support in the form of power, water, connecting roads, drainage, etc.
- NATRIP: Govt of India is currently implementing a project "National Automotive Testing R&D Infrastructure Project" (NATRIP) in Oragdam near Chennai at a project cost of about Rs.450 Crores. This project aims at facilitating introduction of world-class automotive safety, emission and performance standards in India as also ensure seamless integration of our automotive industry with the global industry.