India to overtake Thailand to become global automobile hub by 2020

The manufacturing sector plays a very important role in developing a country’s economy. And in a place like India, where automobile manufacturing was always seen as an important backbone of the country’s GDP, things are  about to get better. According to a report by Standard Chartered Bank, India will overtake Thailand to become the global automobile hub by 2020. 

This report comes at a time when the new Narendra Modi government is betting big on the manufacturing sector and has asked various companies to set up shops in India. During the 68th Independence Day, the Prime Minister used four powerful words “Come, make in India”. We are expecting many automobile manufacturers to take this seriously and produce more auto components in the country and export it worldwide. Hyundai plans to source engines for its global operations from India whereas Ford plans to make India its manufacturing hub for engines for the Asia-Pacific region and Africa. On the other hand, Volkswagen plans to increase sourcing from India to 70 per cent of total global sourcing. Toyota and Suzuki are also increasingly using India as a sourcing hub for global requirements.

There are various reasons why India looks more attractive than Thailand. Few of the major reasons are that firstly, the new government has shown interest in  some serious governance in the country.  Secondly, India sold 2.7 million vehicles in 2012-2013, making it one of the largest car markets in the world. China leads this sector with annual sales of over 20 million cars. Thirdly, the transit time to Europe from India is less than that of Thailand. The transit time for ocean freight to Europe is 22 days from Mumbai versus 28 days from Bangkok and 26 days from Jakarta.

This is also good news for component manufacturers who will see a drastic increase in their overall revenues. This development will also create thousands of jobs, which is much needed for the country.