India: demand and investments are growing in the automotive sector

The automotive sector in India is experiencing a particularly fortunate market phase and is having to make some important decisions to adequately cope with its development. To meet the growing and unstoppable growth in demand, Indian entrepreneurs in the sector will have to make important decisions regarding the expansion of production capacity: the expansion of middle class India is no secret, just as it is known that the Indian market is a market based on large numbers.

Considering these conditions, here are some forecasts on the Indian market for the next ten years of development:

– Domestic demand will quadruple its demand

– Exports will increase seven times their current value

– Significant increase in jobs

– The sector will account for 3.6% of India's GDP

The automotive sector in India is therefore facing an important phase of its growth: the constant increase in demand (sales compared to the period 2004-05 increased by 45%) is a major challenge and high appealing both for local producers and for players international.

The reaction that the automotive offer is demonstrating is based on:

– A growth that aims at achieving strong economies of scale

– The attraction of talents useful for a coherent development with global standards

– A strong expansion of production capacity: Renault and Nissan have recently built a plant of 400,000 units/year and Suzuki has invested around €200 million to bring the capacity of its plant from 1 to 1.7 million units/year by 2013.

A future challenge, on the other hand, will concern human resources: if India intends to become an automotive manufacturing hub, it will be necessary to invest in the training of engineers and in the development of the R&D area as strategic competitive factors.

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