Indian auto industry could be worth $1.6 trillion by 2047, EVs driving that boom, says IN-SPACe's Pawan Goenka

Pawan Goenka, Chairman of SCALE and IN-SPACe at the Department of Space, was the former president of Mahindra and Mahindra (M&M)

The Indian automotive industry is poised to be one of the key growth engines in the government’s vision of achieving a $32-trillion GDP by 2047, with the potential to contribute at least $1.6 trillion, said Pawan Goenka, Chairman of SCALE and IN-SPACe at the Department of Space.

“Let’s take that for a given that we will achieve a $32 trillion economy and 25 percent of that from the manufacturing (sector). And at least 20 percent from that coming from the automotive industry is a reasonable expectation. That means an automotive industry contributing $1.6 trillion by 2047,” Goenka said at the 64th session of the Automotive Component Manufacturers Association (ACMA) in New Delhi.

In order to achieve that, the automotive sector would need to grow at an average nominal rate of 11 percent in topline revenue in dollar terms, according to Goenka. He stated that over the last 23 years, the industry has grown by 17 percent CAGR. “Even if we grow by 17 percent CAGR, we will be $5.3 trillion.”

However, he maintained that the domestic market will not grow at 11 percent and there will be a sizeable contribution from exports. “An eight percent domestic growth over the next 23 years is reasonable target to get $700 billion (by 2047). That means $900 billion has to come from exports - $500 billion from auto components and $400 billion from auto OEMs.”

He reasoned that if $100 billion auto component exports happen by 2030; it is only 10 percent CAGR from there onwards. “That is the power of compounding. And for vehicles, 40 percent exports (from total output) will get us to $400 billion. So, the industry needs to majorly focus on exports. It is doable (as) we do have the products, technology, quality, etc and we always had the cost.”

He also clarified that mobility solutions must be sustainable, safe and fossil-fuel free. “This cannot happen without disproportionately focussing on R&D and technologies.” According to him, each and every car sold in the country should have 5-star ratings.

He also noted that the country imports 120 billon worth of fossil fuels and has one of the most polluted cities in the world. In his view, “We must transition to EVs as quickly as possible. We need them more than the US, Europe or China.”

Without disregarding strong hybrid cars, he maintained, “HEVs are not a final solution for the twin problems of high crude oil and heavily polluted cities. EVs are the only way to make that happen.”

Expressing his dismay over low penetration of EVs, he said the cost of the vehicles, despite the best efforts by the government, remain high. Also, there are not wider options available. In his view, electrification of buses can be a gamechanger for the EV industry. “I hope that will happen soon and will change the overall scenario of mass transport. I do believe that future of trucking is in green hydrogen.”

“With all these efforts we will have a good possibility of attaining energy independence, one of the goals for Viksit Bharat by 2047,” affirmed Goenka.