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The automotive industry is expected to play a critical role in the transition towards green energy, the Economic Survey 2022-23 said on Tuesday adding that the domestic electric vehicles (EVs) market is expected to grow at a compound annual growth rate (CAGR) of 49 per cent between 2022 and 2030 and is expected to hit one-crore units annual sales by 2030.
The EV industry will also create five-crore direct and indirect jobs by 2030, it said. “To support and nurture this development, the Government has undertaken multiple steps. The automobile sector is a key driver of India’s economic growth,” it said.
Also read:Economic Survey sees India’s economic growth at 6-6.8% in FY24
In December 2022, India became the third largest automobile market, surpassing Japan and Germany in terms of sales. The sector’s importance is gauged by the fact that it contributes 7.1 per cent to the overall GDP and 49 per cent to the manufacturing GDP, while generating direct and indirect employment of 3.7 crore at the end of 2021, the Survey indicated.
Challenges
However, despite the upbeat outlook, the automotive industry faces certain challenges -- the increase in long-term third-party vehicle insurance premiums has increased the total upfront insurance cost by about 10-11 per cent, especially for two-wheelers, it said.
Therefore, the two-wheeler segment is the most affected and witnessed the lowest sales in the last 10 years. Addressing these challenges will boost the automobile industry, the Survey said.
Also read:Two-wheeler sales a mixed bag in December
It further pointed out that the risk of supply chain shocks has never been more palpable than today, following compounding crises from the US-China trade war, Covid-19, and the Ukraine war. In this fast-evolving context, as global companies adapt their manufacturing and supply chain strategies to build resilience, India has a unique opportunity to become a global manufacturing hub this decade.
The three primary assets to capitalise on this unique opportunity are the potential for significant domestic demand, the Government’s drive to encourage manufacturing and a distinct demographic edge, including a considerable proportion of the young workforce, it added.
Also read:CII hails economic survey, calls for roadmap to reduce fiscal deficit
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