The Indian Automotive Industry after de-licensing in July 1991, has grown at a spectacular rate of 17% on an average for last few years. The industry has now attained a turn over of Rs. 1,65,000 Crores (34 billion USD) and an investment of Rs. 50,000 Crores. Over of Rs. 35,000 Crores of investment is in pipeline. The industry is providing direct and indirect employment to 1.31 Crores people. It is also making a contribution of 17% to the kitty of indirect taxes. The export in automotive sector has grown on an average CAGR of 30% per year for the last five years and has reached a turnover of 8 billion USD. The export earnings from this sector are 3.5 billion US $ out of which the share of auto component sector 1.8 billion US$. It is estimated that the total turnover of the automotive industry in India would be of the order of US$ 75.3 billion in 2012 (a substantial increase from the size of US$ 34 billion in 2005-06).
There is a potential for much higher growth in the domestic market due to the fact that the current car penetration level in India is just 7 cars per thousand. The increase in purchasing power at the top echelon of about 300 million people in the country, where the per capita income is over US $ 1000, implies that passenger car growth in the domestic market is on the verge of a major and sustained boom. It is expected that the passenger car market which was 1 million in 2003-2004 can easily cross the 3 million mark by 2015. This can lead to an increase in the size of the domestic auto-component market from the current level of US $ 9.8 billion (2005-06) to at least US $ 15 billion by 2015.
Even with this rapid growth, the Indian Automotive Industry's contribution in global terms is very low. This is evident from the fact that the passenger car segment has crossed the production figure of 1 million in the year 2005-06. India's share is about 1.6% of world production as the total number of passenger car being manufactured in the world is 60 million against the installed capacity of 90 million. Similarly, export constitutes approximately 0.3% of global trade.