Govt's automotive plan sees fourfold growth by 2026

Bats for lower taxes, advocates policy to scrap old vehicles

The Indian automotive sector is projected to see a fourfold growth in value to Rs 18.89 lakh crore by March 2026, triggered by the gross domestic product (GDP) growth of 7.5 per cent during the period, according to the Automotive Mission Plan (2016-2026) released by the government on Wednesday. The mission expresses concern on the high incidence of taxation on the sector and suggests lower taxes for passenger vehicles, tractors, and commercial vehicles used for public transport.

The value of the automotive sector was Rs 4.64 lakh crore in the year ended March. Conservative estimates in the mission plan suggest the sector might grow to Rs 16.16 lakh crore by 2026.

The mission plan, prepared in consultation with all stakeholders, aims to propel the sector to be the engine of the Make in India programme. "Over the next decade, the sector is expected to contribute in excess of 12 per cent of the country's GDP and comprise more than 40 per cent of its manufacturing sector," said the mission plan. Currently, the sector accounts for 7.1 per cent of the GDP.

The sector is expected to create nearly 65 million jobs over the next decade, in addition to the current 25 million jobs. The mission plan takes into account the low automobile penetration in the country, where only 16 in every 1,000 people own a car.

According to the plan, exports of finished auto products and components will grow from Rs 1.31 lakh crore to Rs 4.95 lakh crore by 2026. It suggests facilities such as berths, parking and faster clearance for automotive exports at ports.

The component after-market is projected to grow five-fold from Rs 39,900 crore to Rs 2 lakh crore by 2026. In what could be a worry for the industry, component imports are projected to jump from Rs 84,300 crore to Rs 1.83 lakh crore.

The plan envisages the implementation of the End of Life policy for automotive vehicles and components.

"A logical plan to retire older vehicles and components that are not conducive for further use must be in place," it stated. It talks of vehicle scrapping centres with a national footprint.