India has the 4th largest automotive industry in the world with an aspiration of becoming 3rd largest till 2026. Our automotive sector contributes 7.1% of total GDP and also generates employment for 35 million people. The automotive industry also plays a major role among the services of outsourcing in India including CAD outsourcing, CAM outsourcing, engineering services, etc.
The automotive industry of India does not just contribute to the internal economy through direct production but also contributes through various services offered to MNCs by various product design companies in this field. Let’s discuss the automotive industry from the aspect of product design companies and outsourcing in India.
Automotive industry and outsourcing in India
Since globalization, the Indian automotive industry has contributed a huge amount to the services of outsourcing in India. Availability of educated and trained labor along with developing infrastructure made India, the top choice of foreign companies for automotive outsourcing.
Due to increased labor costs and shorter product cycles, the automobile industry of the US and Europe is facing intense competition. That’s why Original Equipment Manufacturers [OEM] are heading towards India and China for outsourcing services. The growing international conflicts and competition has also boosted outsourcing in India because many countries are planning to shift their supply chains, from their initial suppliers, to India.
The largest share of outsourcing in India is held by the engineering and technical services sector which is around 38%. It is very beneficial for CAM/CAD outsourcing companies and product design companies along with engineering service companies like Infosys, Satyam along with automotive giants like Tata and M&M. Large companies like Ford are also setting R&D facilities in India.
Automotive Industry and R&D facility in India
Auto giants from all over the world along with luxury car makers like Mercedes-Benz are setting R&D centers in India, inducing it to become a global R&D hub. Global R&D cost, skilled human resource, and potential of the large developing market is attracting more investment from global companies.
The automotive industry’s R&D has increased by 4.5% from 2014 to 2015. Till now, India has 30 R&D centers of various automotive companies. Volkswagen has a plant in Chakan, Pune similarly, M&M has also opened a plant in Chakan with an investment of Rs. 5000 crores. M&M is also planning to manufacture new models from Sssanyong Motors. Tesla has also planned to set up an R&D center in Bangalore. BMW has also branched itself as BMW India. After outsourcing in India, automotive MNCs are coming to India for their R&D facilities and CAD outsourcing. Automotive giants are also contacting various Indian product design companies due to the talented skillset and outstanding CAD outsourcing.
Product design companies in India like Tata ELXSI, Renault Design Studio, Mahindra Design Studio, etc. are also working in the field of self-driven vehicles, though many experts think that India is not yet ready for autonomous vehicles.
FDI in the automotive industry
Till 2020, the Indian automotive industry has received a total FDI of $2.82 billion. In January 2021, Lamborghini planned to increase its sales from 2019-levels. FCA has announced an investment of $250million in Jan 2021 to extend its line-up of local products in India. Hyundai Motor India has invested Rs. 3,500 crore in FY20.
Mercedes-Benz has partnered with the State Bank of India to provide attractive interest rates along with an increasing customer base. MG Motors announced in October 2020, to invest Rs. 1000 crore to launch new models.
Toyota Kirloskar Motors announced an investment of Rs. 2,000 crore in India. In March 2020, TVS bought Norton for about Rs. 153 crore to enter the segment of superbikes.
Effect of Covid-19 on Indian Automotive Industry
Speculations have been made that it will take 6 years to recover our automotive industry from the ill effects of Covid-19 along with stabilizing automotive product design companies and outsourcing in India.
The covid-19 ill effects on the automotive industry are ranging from raw material shortage, shifting production to other countries, shrinkage in customer demands, liquidity crunch to delay in the availability of various vehicle models. In total Indian Automotive industry has suffered a loss of Rs. 2,300 crore due to Covid-19 along with negative effects on automotive product design companies and automotive outsourcing in India.
Crediting this boost in the Automotive industry, Sudarshan CADD Technologies has emerged as a leading name in the Product Design & Engineering domain. Our aim is to deliver high-end development lifecycle services to all our clients at a cost-effective price.
Growing with organizational values of Innovation, Acceleration, & Optimization, Sudarshan CADD Technologies has outperformed many to gain the clients trust and reliability. To know more about our journey and services, please visit our website- www.sudarshantech.com or you can drop us an email at- email@example.com.