Indian auto industry back in mega investment drive

As of now the resilient Indian automotive industry is preparing to infuse at least $10 billion in Capex and enhance production capacity from 2.2 to three million cars in the coming years, writes Ketan Thakkar.

There is a right time to do things and for the Indian auto industry, the right time for big investments is now! Two consecutive years of a strong double-digit growth post-Covid-19 has convinced car makers to loosen their purse strings and commit over $10 billion as investment into products and capacity expansion in the coming decade.

The investments will lead to an incremental capacity of a minimum 2.5 million units, taking the overall industry capacity to about 7.5-8 million units by 2030. This fresh capacity will come over the next five to eight years.

Some of it has already started coming on stream, the rest will be added as the new generation electric vehicles get ready for a rollout between 2024-2028.

A significant part of this investment will also go into upgrading products, launching new models and getting into the electric vehicle space in the coming years.

A quick look at who's doing what suggests that market leader Maruti Suzuki will be adding one million units out of its new factory in Kharkhoda, Haryana by 2028. The first 2.5 lakh units will be commissioned by 2025 itself, with plant construction in full swing at present.

In order to cater to the increased demand, the company has also decided to increase capacity at Manesar factory by one lakh units in 2024.

RC Bhargava, chairman of Maruti Suzuki recently said, "Maruti is not holding back on capex, we are spending a very large amount of money. We have just approved a big investment in Kharkhoda, Haryana. Suzuki is investing in Gujarat for battery and electric vehicle manufacturing plans.