Madhya Pradesh auto industry to drive next phase of growth for Indian auto sector

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In the future decades, India's booming youth population, combined with rising middle-class affluence, is predicted to fuel the high demand for automobiles. This has been demonstrated by the major automakers' increased attention and investments over the last decade. According to the data, the Indian automobile business attracted nearly $30 billion in equity FDI between April 2000 and September 2021. Furthermore, by 2023, the Indian government anticipates the vehicle sector to attract $8 to $10 billion in local and foreign investment.

Moreover, the Government of India has also been ramping up its efforts to revolutionise the auto sector through necessary policy interventions. In the same direction, the central government, in September 2021, issued a notification regarding a PLI scheme for the automobile and auto component industry worth ₹ 25,938 crores (about $3.49 billion).

The government has also collaborated with various Indian automotive industry associations and envisioned the Automotive Mission Plan 2016-26 (AMP 2026) as an initiative driving sector growth. AMP 2026 is the collective vision. The vehicles, auto components, and tractor industries are expected to grow over the coming decade in terms of size, global footprint, technological advancement, exports, economic growth, and institutional structure capabilities. It also defines the evolution trajectory of the automotive ecosystem in India, including the regulations and policies governing research, design, technology, testing, manufacturing, and recycling of automotive vehicles.

The Automobile industry of India manufactured more than 22 million vehicles from April-March 2020, including passenger and commercial vehicles, three-wheeled vehicles, two-wheelers, and quadricycles, of which more than 4 million vehicles were exported. India holds a strong position in the international heavy vehicles arena as the largest tractor manufacturer, second-largest bus manufacturer, and the third-largest heavy trucks manufacturer globally. The sector pundits have predicted India to become the world's third-largest automotive market in terms of volume by 2026, which is currently worth more than $100 billion and contributes to 8% of the country’s total export accounting for 2.3% of India's GDP.

The Indian auto industry is expected to record strong growth in 2022-23, following the recovery from the effects of the Covid-19 pandemic. This growth is expected to reach up to ₹ 18.18 trillion ($282.8 billion) by 2026, where the centrally located state of Madhya Pradesh is expected to be one of the major driving forces.

Currently, Madhya Pradesh houses one of the leading auto clusters of India at Pithampur near Indore and at Mandideep near Bhopal. There are more than 10 Original Equipment Manufacturers (OEMs) and 200 Auto Component Manufacturers (ACMs) present in the State, which employs a workforce of about 200,000 technical professionals.

The state offers infrastructure including industrial parks, Inland Container Depots, industrial corridors, and testing facilities like Central Farm Machinery Training & Testing Institute at Budhni. The state also has skill development institutes such as the IndoGerman Tool Room, Symbiosis Skill University and MSME technology Centre, besides other technical training institutes.

The initiatives taken by the Madhya Pradesh government in developing the auto sector have begun to pay dividends, as the Pithampur auto cluster has been an emerging auto hub of central India. The auto cluster is spread across a total area of nearly 4,500 hectares, housing over 100 large and 2,500 MSME units with a combined investment of more than $ 20 billion. The auto cluster has an investment of ₹ 97,500 crore and exports goods worth ₹ 1,500 crore.

The Government of India, under NATRiP, a flagship project of the Ministry of Heavy Industries, has been establishing a series of cutting-edge testing and research centres in the country since 2015. One of the research centres is the National Automotive Testing Tracks (NATRAX), which has been established in the Pithampur auto cluster near Indore. Admittedly, it is Asia’s longest high-speed track and the fifth-largest in the world. NATRAX is spread across an area of 1200 hectares with 11.3 km of testing tracks, established with an investment of $ 200 million. The facility has 14 types of test tracks, including Vehicle Dynamics, fatigue and NVH (Noise, Vibration and Harshness) testing facilities, among many others.

The Madhya Pradesh government is leaving no stone unturned to establish its dominance in the rapidly growing sector of auto manufacturing. Following this vision, it has also planned to host the first-ever Madhya Pradesh Auto Show from 28th to 30th April 2022. This first-ever auto show is poised to be held at the Super Corridor Square near Indore airport and at the National Automotive Test Tracks (NATRAX) in Pithampur. The Hon'ble Chief Minister of the state, Shri. Shivraj Singh Chouhan has called this a “pivotal role in the economic development of 21st century India." He has also urged the investor community to be a part of this development story of Madhya Pradesh. This event would promote a conducive infrastructure ecosystem in Madhya Pradesh for Automobiles and other sector, which will play a pivotal role in driving India’s economic growth an important role. The state government is geared up to host this event in partnership with the Confederation of Indian Industry (CII), Society of Indian Automobile Manufacturers (SIAM) and Automotive Component Manufacturers Association of India (ACMA).