The ratings agency also highlighted significant challenges facing India's electric vehicle transformation, pointing to infrastructure deficiencies and supply chain obstacles.
Share Post
The ratings agency also highlighted significant challenges facing India's electric vehicle transformation, pointing to infrastructure deficiencies and supply chain obstacles.
India is set to maintain its key role in international automotive manufacturers' long-term strategies, according to a fresh report released by Moody's. The credit rating firm cited the country's expanding workforce demographics and increasing household wealth as key drivers behind this.
The ratings agency also highlighted significant challenges facing India's electric vehicle transformation, pointing to infrastructure deficiencies and supply chain obstacles that continue to hamper widespread adoption of battery-powered transportation.
Moody's report concluded that while electric vehicle (EV) profitability will likely remain constrained across most global markets, India's favourable population trends and rising consumer spending will continue supporting robust demand for conventional internal combustion engine vehicles.
Moody's projects Indian automobile sales will expand at a 3.5 per cent compound annual rate, surpassing all other Asian markets, with total units reaching approximately 5.1 million by the decade's end.
This growth trajectory reflects substantial untapped demand in a market where vehicle ownership remains relatively limited compared to developed economies.
"A low car penetration rate of only 44 cars per 1,000 people underlines the significant growth potential in India, which is already the world's third-largest auto market by unit sales," the report added.
The Indian automotive landscape features robust competition, with local manufacturers capturing roughly 25 per cent of total sales volume. International players from Japan, Korea, and China control more than 70 per cent of market share, typically operating through joint ventures or subsidiary arrangements that allow them to leverage established global product portfolios.
Moody's analysis indicates that ongoing trade discussions and recent agreements with the United Kingdom suggest mounting external pressure to reduce protectionist policies, particularly the high import duties that have historically shielded domestic producers.
While consumer interest in electric mobility continues growing, India's electrification journey remains in preliminary phases. Major manufacturers including Tata Motors and Hyundai are concentrating on fully battery-electric models, while Honda has announced plans to introduce plug-in hybrid alternatives initially.
Industry participants are anticipated to commit more than $10 billion in investments through 2030 to establish competitive positioning in the electric segment, though these capital expenditures will strain cash flow generation in the near term.
"The pace of battery electric vehicle adoption hinges on the development of a robust ecosystem, including nationwide charging infrastructure and reliable domestic battery supply chains," Moody's said.
Conventional Vehicles Remain Strategic Priority
As automotive manufacturers face mounting regulatory pressure to electrify their offerings across China, Europe, and North America to satisfy emissions requirements, India's high-growth traditional vehicle segment continues attracting significant corporate attention.
The subcontinent additionally functions as an export manufacturing base for several international brands, reinforcing its strategic value beyond domestic market considerations despite the gradual pace of local electric vehicle uptake.
BMW M3 CS Touring Is The Fastest Station Wagon Around Nurburgring
Satvik Khare 31 Jul, 2025, 1:44 PM IST
Maruti Suzuki Q1 Results: Exports Drive Through, Small Car Sales Dip 37%
Pratik Rakshit 31 Jul, 2025, 11:45 AM IST
Lamborghini Delivers Record 5,681 Cars in H1 2025, Revenue Holds at €1.62 Billion
Pratik Rakshit 31 Jul, 2025, 11:24 AM IST
TVS Achieves ₹10,000 Crore Turnover in Q1 FY26, Driven by Exports, EVs and Premium Portfolio
Pratik Rakshit 31 Jul, 2025, 9:37 AM IST
JSW Motors Taps Pune-Based KPIT to Power Software-Defined EVs for India
Pratik Rakshit 31 Jul, 2025, 8:33 AM IST
Looking for a new car?
We promise the best car deals and earliest delivery!