The booming Indian Automotive Industry: Should we rejoice ?

India is booming in every nook and corner, be it the retail sector or the telecom sector, the real estate or even the panwala next door ! Money is flowing into India and its people like never before. And why not, after all Indian middle class is set to expand nearly 10 times from its current size of 50 million to 583 million by 2025, according to consultancy firm Mckinsey.

Like any other sector Indian Automotive Industry too is booming. I have earlier written about the how car manufacturers are making a beeline in India by announcing their plans to make cheap $2500 (Rupees 1 lac to 1.5 lac ) cars. With the growth in Indian middle class consumer, the Indian Auto Industry is set to grow exponentially. Currently, India has low car ownership rates ? there are 7-8 cars per 1,000 people compared with 300-500 cars per 1,000 people in many Western nations, but annual passenger vehicle sales in India are expected to double to 2 million units by 2010.

However, the fallout of all this growth may turn out to be a Traffic and Environmental disaster. Is any body thinking about where are we going to drive these cars or what will happen to all the emissions of the greenhouse gasses tied to global warming ?

This is a big question that the government needs to answer. I can bluntly say right now that we are not in a position to cope up with this tremendous growth on existing infrastructure. The government is doing its best to ensure that Infrastructure like roads on which these cars will ply are built and widened so that it can accommodate this growth of traffic. However, like in the past - I foresee government to really fall short on this one by very wide margin.

Another issue is the pollution that these news cars are going to cause. I am not sure of how strict are emission standards in India. According to me, we are far behind the western countries, when it comes to clean emission standards (correct me if I am wrong on this one). Even in today’s situation, the pollution levels in India are much above critical levels - and mind you, I am talking about pollution in Tier 2 cities like Pune couple years back. I have not been in India recently, but I really do not think that the situation must have changed too much there.

India has normally been a country of two wheelers. Last 10 years have seen millions of new motorbikes come on roads. These bikes cost anywhere between Rs. 40,000 to 70,000 on average. These users will happily buy a car which is around lac of rupees ($2,500). Just imagine the kind of colossal growth we are looking at !
Tata had announced there 1 lac car couple of years back and they expect it to hit the road by as early as next year. A lot of other car manufacturers have joined the bandwagon, latest being Renault, who very recently announced their $3000 car for India.