India Rising: The Growth of the Indian Auto Industry

With the steady arrival of new Chinese brands and the seemingly endless rollout of their new models dominating current motoring headlines, one could be forgiven for overlooking the growth of the Indian auto industry and its impact on the SA market.

Tata Tiago. Image: Tata Motors

Chinese brands continue to dominate the motoring conversations in South Africa; this is hardly surprising when you consider their rapid growth in recent years and the fact that their two leading brands in SA are now firmly entrenched in the top 10 of our sales charts. Against this backdrop, the recent announcements from India’s largest vehicle manufacturers have become even more newsworthy.

Tata has announced its return to the SA passenger-car market with a four-model hatch and SUV lineup, including the Tiago. These announcements should come as little surprise, considering that, for several years, a significant majority of SA’s passenger-car and LCV (light commercial vehicle) imports have been sourced from India. Naamsa records show that, in 2024, imported vehicles accounted for 62.8% of the SA light vehicle market, with India supplying 173 742 vehicles to make up just over 57% of those imports.

From modest beginnings in the mid-20th century, the Indian motor industry is currently experiencing significant growth, producing more than six million vehicles in 2024 to make it the world’s fourth-largest global auto manufacturing and export hub, behind China, the US, and Japan.

Origins and Early Development

India’s automotive story began in 1897 with the first privately imported car running on Indian roads, and until the 1930s, all vehicles were imported, with the numbers being minimal. The automotive industry began taking shape in the 1940s with the establishment of companies such as Hindustan Motors, Premier, Tata Engineering and Locomotive Company (now Tata Motors), Mahindra & Mahindra, and Standard between 1942 and 1948.Their initial focus was on assembling and producing vehicles based on foreign designs, mostly from well-known British and American manufacturers.

Following independence in 1947, one of the new government’s objectives was the creation of a national automobile industry, and the newly established Tariff Commission introduced policies to promote local component manufacturing. By 1954, these included the imposition of tariffs on imported cars, resulting in established importers Ford, General Motors, and the Rootes Group leaving the country. These policies shaped early Indian OEM growth by shielding the domestic market to nurture the new Indian manufacturers, mandating local manufacturing that stimulated supplier industries, and encouraging the emergence of large business groups in the automotive sector.

On the downside, the complex system of government licenses, permits, and regulations intended to control and regulate the economy became known as the “Licence Raj”. This was characterised by bureaucratic red tape, which often led to delays, stifled competition, and created opportunities for corruption.

This period also saw the introduction of two iconic vehicles which became the mainstay of Indian motoring for many decades – the Hindustan Ambassador and the Premier Padmini. The Ambassador was based on the British Morris Oxford Series III and was also fondly known as the “King of Indian roads”. In production for 57 years, it was finally discontinued in 2014. Built under licence from Fiat, and initially sold as the Fiat 1100 Delight, the Premier Padmini – also simply known as the “Pad” or “Fiat” – was produced for 37 years before its discontinuation in 2001.

Until the early 1980s, with the market closed and waiting lists sometimes stretching up to five years, these two manufacturers, along with Standard Motors, Mahindra & Mahindra, and Tata Motors, dominated the market.

Joint Ventures and Liberalisation

A major turning point came in the 1980s. An initiative to produce a people’s car led to the Indian government licensing Maruti Udyog in 1973 and subsequently facilitating a joint venture with Suzuki in 1982. This development transformed the market, culminating in the launch of the Maruti 800 in 1983 – India’s first affordable, reliable, and fuel-efficient compact car that rapidly expanded domestic car ownership.

The liberalisation of the Indian economy in 1991 marked the next phase of development. The government delicensed the automobile industry in 1993, and foreign manufacturers from Japan (Suzuki, Toyota), South Korea (Hyundai, Daewoo), and others could form joint ventures or establish wholly owned subsidiaries. This opened the market to greater competition, technological transfers, and expanded product choices for Indian consumers.

Image: Maruti Suzuki

Manufacturing, R&D and Legislation

The past three decades have seen Indian manufacturing enhanced by the incorporation of modern robotics, automation, and stringent quality controls. Vehicle assembly operations have evolved to full vehicle manufacturing, with up to 80% localisation of parts and components.

Investments in research and development have led to improved vehicle quality, safety, emissions, and fuel efficiency, while current research and innovation are focused on electrification, vehicle connectivity, and sustainable technologies. Vehicle emissions standards were progressively introduced from 2000 onwards, with the current Bharat Stage VI now aligned with the Euro 6 standard – Bharat is the traditional, and still an official, name for India.

The Bharat NCAP safety testing programme was introduced in 2023 to raise minimum safety standards while ensuring affordability. Testing is broadly aligned with global crash test protocols, but has been adapted for local driving conditions and is not as comprehensive as Euro NCAP, which also evaluates vulnerable road users and safety systems.

In 2006, a lower excise duty for vehicles under four metres in length was introduced, which explains the flush-fitting bumpers and short bootlids of many Indian sedans, hatchbacks and MPVs.

Foreign Markets

India’s strong engineering base and expertise in the manufacturing of competitively priced cars has led to its growth as a major exporter of small cars and commercial vehicles.

In SA, Suzuki and Mahindra have both stablished a strong presence based on a reputation for good pricing, fuel efficiency, durability, and reliability, developed over many years. Recent pressure on vehicle affordability has resulted in substantial growth for both brands, as buyers prioritise these attributes. Several other SA manufacturers and importers also import specific models, built in their Indian factories, as value-focused inclusions to their local model lineups.

The Indian motor industry has developed from a limited, protected market dominated by a few companies assembling foreign designs to a blend of strong domestic and global brands. Joint ventures played a crucial role in technology transfer and market expansion after liberalisation in the 1990s, and today, its manufacturing expertise and growing export strength position it as a highly competitive manufacturing hub in the global automotive arena.

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