Automotive industry in India


The automotive industry in India in 2025 is the world's third-largest by annual production worth US$250 billion, behind the United States and China. The growth of automotive industry in India is fueled by the country's GDP growth and rapid highway construction. In 2022, the industry accounted for 8% of the country's total exports and 7.1% of overall GDP.
According to a 2021 National Family Health Survey, only 8% of Indian households own a car, while 54% own motorcycles or scooters. In 2025, India had 44 cars per 1,000 people, markedly lower than in other major economies.

History

In 1897, the first car ran on an Indian road. Through the 1930s, cars were imports only, and in small numbers.
An embryonic automotive industry emerged in India in the 1940s. Hindustan Motors was launched in 1942 building Morris products, long-time competitor Premier in 1944, building Chrysler Corporation products such as Dodge and Plymouth, and beginning in the 1960s, Fiat products. Mahindra & Mahindra was established by two brothers in 1945 and began assembly of Jeep CJ-3A utility vehicles. In the same years, J. R. D. Tata, the chairman of Tata Group founded TATA Engineering and Locomotive Company in Jamshedpur. Following independence in 1947, the Government of India and the private sector launched efforts to create an automotive-component manufacturing industry to supply to the automobile industry. In 1953, an import substitution programme was launched, and the import of fully built-up cars began to be restricted.

1947–1970

The 1952 Tariff Commission

In 1952, the Indian government appointed the first Tariff Commission, whose purpose was to come out with a feasibility plan for the indigenization of the Indian automobile industry. In 1953, the commission submitted its report, which recommended categorizing existing Indian car companies according to their manufacturing infrastructure, under a licensed capacity to manufacture a certain number of vehicles, with capacity increases allowable, as per demands, in the future. The Tariff Commission recommendations were implemented with new policies that would eventually exclude companies that only imported parts for assembly, as well as those with no Indian partner. In 1954, following the Tariff Commission implementation, General Motors, Ford, and Rootes Group, which had assembly-only plants in Mumbai, decided to move out of India.
The Tariff commission policies by the then Indian National Congress-led government, including similar restrictions that applied to other industries, came to be known as the Licence Raj, which proved to be the greatest undoing of the Indian automotive industry, where bureaucratic red tape ended up causing demand to outstrip supply, with month-long, even year-long waiting periods for cars, scooters, and motorcycles.
;Passenger cars
  • Hindustan Motors was established in Kolkata in technical collaboration with Morris Motors to manufacture Morris Oxford models that would later become HM Ambassador.
  • Addisons, Madras – An Amalgamations Group company, was the agent for Nuffield's Morris, Wolseley, and Riley cars, and Chrysler's Plymouth, Dodge, and De Soto cars and trucks. The first Morris Minor assembled in India and the first car assembled in Madras was driven out from Addison's twin-plants on Smith Road by Anantharamakrishnan on 15 November 1950.
  • Premier Automobiles Limited, Mumbai – entered into technical collaboration with Chrysler to manufacture Dodge, Plymouth and Desoto models and with Fiat to manufacture the 1100D models which would later become Premier Padmini range.
  • Standard Motor Products of India, Madras – entered into technical collaboration from Standard-Triumph to manufacture Standard Vanguard, Standard 8, 10 and later Standard Herald.
;Utility and light commercial vehicles
  • Vehicle Factory Jabalpur – started manufacturing Jonga Light Utility Vehicles and Vahan 1 Ton in India, under license from Nissan of Japan. They were the main troop carriers of the Indian Armed Forces and much more powerful than any other vehicle of their class.Also, Nissan Power Wagon was added to their line.
  • Mahindra & Mahindra plant established in Mumbai – technical collaboration with Willys to manufacture CJ Series Jeep.
  • Bajaj Tempo, Pune, now Force Motors – entered into technical collaboration with Tempo to manufacture Tempo Hanseat, a three-wheeler and Tempo Viking and Hanomag, later known as Tempo Matador in India.
  • Standard Motor Products of India – entered into technical collaboration from Standard and had licence to manufacture the Standard Atlas passenger van with panel van and one-tonne pickup variants.
;Medium and heavy commercial vehicles
  • Tata Motors established a new plant in Pune with technical collaboration with Mercedes-Benz to manufacture medium to heavy commercial vehicles both Bus and Trucks.
  • Vehicle Factory Jabalpur started manufacturing Shaktiman trucks with technical assistance from MAN SE of Germany. The trucks were the main logistics vehicle of the Indian Army with several specialist variants. VFJ still is the sole supplier of B vehicles to the Indian Armed Forces.
  • Heavy Vehicles Factory was established in 1965 in Avadi, Chennai to produce tanks in India. Since its inception, HVF has produced all the tanks of India, including Vijayanta, Arjun, Ajeya, Bhishma and their variants for the Indian Army. HVF is the only tank manufacturing facility of India.
  • Ashok Leyland was founded in Chennai with Leyland Motors to manufacture medium to heavy commercial vehicles both Bus and Trucks. Ashok Motors also discontinued its Austin venture formed in 1948 to sell Austin A40 and retooled the factory to make trucks and buses.
  • Hindustan Motors – had technical collaboration with General Motors to manufacture the Bedford range of medium lorry and bus chassis.
  • Premier Automobiles Limited – entered into technical collaboration with Chrysler to manufacture the Dodge, Fargo range of medium lorry, panel vans, mini-bus, and bus chassis.
  • Simpsons & Co, Madras – part of Amalgamations Group – had technical collaboration with Ford to manufacture medium lorry and bus chassis, but did not utilise that option until the 1980s.+
;Scooters, mopeds and motorcycles
Many of the two-wheelers manufacturers were granted licenses in the early 1960s, well after the tariff commission was enabled.
However, growth was relatively slow in the 1950s and 1960s, due to nationalisation and the license raj, which hampered the growth of the Indian private sector.

1970 to 1983

The beginning of the 1970s did not see growth potential; and most of the collaboration license agreements came to an end, but with the option to continue manufacturing with renewed branding. Cars were still meant for the elite and Jeeps, now owned by American Motors Corporation, were largely used by government organizations and in some rural regions. By the end of the decade, some developments were made in commercial vehicle segments to facilitate the movement of goods. The two-wheeler segment remained unchanged except for increased sales to the middle class in urban areas. There was an emphasis on having more farm tractors, as India was embarking on a new Green Revolution; and Russian and Eastern bloc imports were brought in to meet the demand.
But after 1970, with restrictions on the import of vehicles set, the automotive industry started to grow; but the growth was mainly driven by tractors, commercial vehicles, and scooters. Cars still remained a major luxury item. In the 1970s, price controls were finally lifted, inserting a competitive element into the automobile market. However, by the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited numbers. The rate of car ownership in 1981 was about one in every thousand citizens – understandable when the annual road tax alone cost about half the average income of an Indian at the time.
During the eighties, a few competitors began to arrive on the scene. Of the 30,487 cars built in India in 1980, all but six came from the two main players Hindustan and Premier: Standard had led a shadow existence in the latter half of the 1970s, producing only a handful of cars to keep their license active. A new contender was tiny Sipani, which had tried building locally developed three-wheeled vehicles since 1975 but introduced the Reliant Kitten-based Dolphin in 1982. Nonetheless, all eyes were on Maruti, which caused a major upheaval to the Indian automobile industry.
The OPEC oil crisis saw increased need to install or redesign some vehicle to fit diesel engines on medium commercial vehicle. Until the early 1970s Mahindra Jeeps were on Petrol and Premier commercial vehicles had Petrol model options. The Defence sector too had most trucks on Petrol engines.