Indian Auto Sector Poised for Global Growth, Says MEA Official

India's automotive sector is uniquely positioned to capitalise on the evolving global economic landscape, according to Sudhakar Dalela, Secretary (ER) at the Ministry of External Affairs, speaking at the 65th SIAM Annual Convention.

Addressing leaders from the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association (ACMA), Dalela highlighted India's robust economic performance with GDP growth of 7.8% in the first quarter, reinforcing confidence in the country's trajectory.

Strong Domestic Foundation

The automotive sector has emerged as a cornerstone of India's economy, contributing 47-48% to the country's manufacturing GDP and ranking among the largest export sectors. India now holds the position of third-largest market for cars and commercial vehicles globally, and second-largest for two-wheelers and three-wheelers.

"The automobile sector has been one of the main pillars of the Indian economy," Dalela noted, emphasising its role in generating large-scale employment and fostering innovation whilst connecting SMEs, component manufacturers, logistics companies and raw materials suppliers.

GST Reforms Boost Sector

Recent GST reform measures have provided significant relief to the automotive industry by rationalising the rate structure and reducing the overall tax burden. Industry leaders have responded positively to these changes, with expectations of strong sales during the upcoming holiday season.

Global Expansion Strategy

Dalela stressed the importance of strengthening the sector's international footprint through free trade agreements (FTAs) and economic partnerships. The Ministry of External Affairs has committed to facilitating industry expansion into new markets and integration with global value chains.

The official identified particular opportunities in electric vehicles whilst acknowledging continued demand for conventional internal combustion engine vehicles in Latin America, Africa and other regions.

Supply Chain Resilience

Addressing supply chain challenges remains a priority, with Dalela noting the importance of securing critical materials and addressing supply gaps. The MEA has pledged continued support for sustainable mobility initiatives and strengthening industry linkages with international governmental stakeholders.

"The Ministry of External Affairs is committed to extending facilitation and support as the industry reaches out to new geographies," Dalela said, emphasising the sector's potential to position India as a significant global player.

The automotive component sector, in particular, was highlighted for its potential to expand further into global value chains, building on India's manufacturing capabilities and competitive advantages.