Following nearly four years of stagnation or slow growth in sales and production, India is set to return as a key growth market in global vehicle sales and trade over the next six years. This optimism was seen at the two-day Automotive Logistics India Conference took place in New Delhi on December 9-10, 2015, where the big-wigs from automotive industry participated.
According to figures from automotive analyst firm, Jato Dynamics, the Indian economy has emerged as a global leader in growth this year, with 7.1 pc GDP growth this year and 7.4 pc expected in 2016. According to Amit Kaushik, Jato’s country head for India, who was speaking at this week’s Automotive Logistics India conference in Delhi, India has outpaced China in both years. “The vehicle market has been somewhat slower, returning to low single digit growth in 2015 compared to 2014, with passenger car sales hovering around similar levels since 2011. This year, light vehicle sales are expected to hit 2.6 million and total vehicle production around 3.1 million units, including light commercial vehicles. However, starting in 2016, that total figure is expected to increase to 3.4 million and expand steadily.” By 2022, Jato forecasts vehicle sales reaching an optimistic 5.8 mn, with 4.9 mn made up of passenger cars.
Even the government’s recently-announced Automotive Mission Plan for the decade to 2026 brings a ray a hope for the industry. According to the plan, passenger vehicle production is targeted to be between 9.4-13.4 million units per annum (the base and optimistic cases) by 2026, with exports accounting for 35-40 pc of output.
For the logistics side of the business, Jasjit Sethi, CEO of TCI Supply Chain, India’s automotive logistics provider, pointed to economic surveys that put Indian logistics at closer to 5.5 pc of GDP, which is very low. He pointed out that trucking, labour and warehousing costs in India were actually very low by international standards. However, he pointed out that costs are set to rise, driven in part by new regulations on safety and emissions, as well as rises in wage, including the state of Haryana’s recent increase in the minimum wage by 29 pc. “When you build up infrastructure, you put tolls – that will also raise costs. New regulations for car carrier size will also make them small and safer, but that will drive up costs. The problem is not in the costs but it is the efficiency. That is why India scores so low,” he said.