Auto Industry Emerges as Backbone in India’s $5 Trillion Economy Mission

India’s drive to become a $5 trillion economy is seeing the automobile sector as a crucial growth engine. The sector accounts for 7.1% of India’s GDP and roughly 49% of its manufacturing GDP. It supports more than 3.7 crore employment and accounts for around 8% of India’s total exports.
In 2024-25, India became the world’s third-largest automobile market by sales and fourth-largest by production. The country manufactured approximately 31 million vehicles in various segments, including over 5 million passenger cars and 24 million two-wheelers. Exports totalled 5.7 million automobiles, with shipments to Japan, Mexico, Latin America and Africa.
Government programs like the Production Linked Incentive (PLI) scheme and FAME-II have aided this expansion. The PLI project, with a budget of Rs 25,938 crore, has received investment offers totalling more than Rs 67,000 crore. FAME-II has sponsored more than 1.3 million EVs and has extended its support until March 2025.
The PLI program for Advanced Chemistry Cell Battery Storage intends to reduce battery import dependency, with three companies building gigafactories. The Vehicle Scrappage Policy encourages the disposal of outdated vehicles. In 2024-25, EVs accounted for more than 6% of total sales, surpassing the 4% market share in May 2025.