Centre aims Indian auto industry to double growth in two years: Nitin Gadkari

In its efforts to make India the global hub for automobile manufacturing, the Centre has set itself an ambitious target to help the sector double its growth in the next two years. Nitin Gadkari, Minister for Road Transport and Highways (MoRTH), said that the government is targeting the auto industry to grow to ₹15 lakh crore by the end of 2024, making it one of the world's top countries in auto sector. Nitin Gadkari had earlier said a number of times that he aims to make Indian automobile sector number one in the world.

The Indian auto industry currently contributes around six per cent of the country's total GDP, which amounts to a little over ₹7 lakh crore. The sector also contributes 35 per cent to the manufacturing GDP and ₹1.79 lakh crore to GST revenue collection every financial year. "Currently our automobile industry is ₹7.5 lakh crore and we want to take it to ₹15 lakh crore by the end of 2024, making it one of the largest automakers in the world, creating huge job opportunities," Gadkari said at an event organised by the Merchants' Chamber of Commerce and Industry.

The auto industry also helps the Centre earn around ₹50,000 crore as Motor Vehicle Tax as well as provide employment to around three lakh people around the country. It also contributed to India's overall exports worth around $33 billion. Gadkari had earlier said that he wants to see the Indian automobile industry become number one in the world for export of electric car, scooter, buses, auto rickshaw and trucks, in five years.

While the Centre aims the auto sector to grow, there are opinions within the industry that questions the current vehicle tax structure. Maruti Suzuki chairman RC Bhargava indicated that demands for small cars in India have declined significantly in recent times because of the high tax burden. He reportedly said that having a uniform tax structure across all segments of vehicles will not augur well for the growth of the Indian auto industry. Maruti Suzuki has the largest share in the small car segment in the Indian auto market. (Read the full report here)

Vehicles are currently taxed at 28 per cent GST with additional cess ranging from one to 22 per cent depending on the type of vehicle. Cars imported to the country as Completely Built Units (CBU) attract customs duty ranging between 60 per cent and 100 per cent, depending on engine size and cost, insurance and freight (CIF) value being less or above $40,000. Electric cars, be they small or big, attract just five per cent GST under the new tax regime.