India’s Auto Sector Fuels Economy with 15% GST Contribution
The Society of Indian Automobile Manufacturers (SIAM) has reported that the automobile sector plays a vital role in India’s economy, accounting for nearly 15% of the country’s GST revenue collections. This sector is not only a significant contributor to the nation’s finances but also a powerhouse of employment, generating an estimated 30 million jobs across the entire automotive value chain.
According to the latest data, the production, sales, and exports of automobiles in India for the year 2025 show promising figures. Passenger vehicles saw a production of 53.8 lakh units, with sales of 44.9 lakh and exports reaching 8.6 lakh units. Meanwhile, commercial vehicles had a production of 11.1 lakh, accounting for sales of 10.3 lakh and exports of 0.9 lakh. The data for three-wheelers indicated a production of 12.2 lakh with 7.9 lakh sold and 4.3 lakh exported, while two-wheelers dominated with a massive production of 255 lakh units, leading to sales of 205 lakh and exports of 49.4 lakh. The full data reflects the strength and growth of the Indian automotive industry.
Capital Goods Sector Contributions
The capital goods industry also adds significant value to the economy, contributing approximately 1.9% of the GDP. Detailed data from the financial year 2024-2025 shows production figures for various sub-sectors, including machine tools, textile machinery, and food processing machinery, each indicating strong manufacturing activity. Notably, earthmoving and mining machinery led in production with ₹80,750 crore, significantly surpassing import figures of ₹4,250 crore and exports of ₹6,800 crore.
Government Schemes Boosting Manufacturing
To further enhance domestic manufacturing capabilities, the Ministry of Heavy Industries (MHI) is implementing several key schemes. The Production Linked Incentive (PLI) scheme for the Automobile and Auto Component Industry offers ₹25,938 crore to boost manufacturing of advanced automotive technologies, with a focus on electric vehicles (EVs) and ensuring at least 50% domestic value addition.
Other significant initiatives include the PLI on the National Programme for Advanced Chemistry Cell (ACC) Battery Storage with an allocation of ₹18,100 crore aimed at supporting competitive domestic manufacturing of battery storage systems. Additionally, the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM EDRIVE) scheme, which launched with a budget of ₹10,900 crore, aims to bolster the electric vehicle market by supporting various categories of electric transport.
More efforts are evident in the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI), which promotes the domestic production of electric cars. Under the Enhancement of Competitiveness in The Indian Capital Goods Sector- Phase II, the government is driving technology development through various projects aimed at improving manufacturing infrastructure.
In response to the growing demand for skilled labor, Phase II has also sanctioned initiatives to create skill development programs aimed at enhancing competencies in the capital goods sector.
This comprehensive approach, as shared by the Minister of State for Heavy Industries, Shri Bhupathiraju Srinivasa Varma, reflects the government’s commitment to not only boost domestic manufacturing but also to leverage the automotive industry as a key pillar of economic growth and job creation.
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