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As per the Economic Survey 2023, the strong growth in demand, due to better offers and the availability of more attractive cars, contributed to the 24 percent increase recorded by the overall market. In 2021, India was the largest manufacturer of two-wheeler and three-wheeler vehicles and the world’s fourth-largest manufacturer of passenger cars.
India's domestic electric vehicle (EV) market will grow at a compound annual growth rate (CAGR) of 49 percent between 2022 and 2030 and will see one crore units in annual sales by 2030, noted the Economic Survey presented by Finance Minister Nirmala Sitharaman on January 31. As per the government of India’s Vahan portal, 999,949 EVs were sold in 2022.
The Survey also noted that the electric vehicle industry in India will create 50 million direct and indirect jobs by 2030, apart from playing a critical role in the transition towards clean energy.
As per the Survey, in December 2022, India became the third-largest automobile market, surpassing Germany and Japan in sales. In 2021, India was the largest manufacturer of two- and three-wheelers and the fourth-largest maker of passenger cars. "The sector's importance is gauged by the fact that it contributes 7.1 percent to the overall GDP and 49 percent of the manufacturing GDP while creating direct and indirect jobs for 3.7 (37 million) crore people," it stated.
The Survey states that the stress in two-wheeler sales is the lowest in 10 years. "Higher borrowing costs and tempering global demand are near-term hurdles for the auto sector. An increase in long-term third-party insurance premiums has increased total upfront costs by 10-11 percent. Two-wheeler segment witnessed the lowest sales in 10 years. There is a need to address short-term and structural hurdles for the sector's growth," noted the Survey.
As per the data in the Survey, the FAME scheme has incentivised 7.1 lakh EVs. 7210 e-buses and 2,877 charging stations have been sanctioned under the scheme. It also said that the ACC and automobile sector PLI schemes could generate investments to the tune of one lakh crore rupees.
Third-party motor insurance to grow manifold
India, as the world’s third-largest automobile market, has seen the sector become a key driver of its economic growth. India became the third-largest automobile market in December 2022. The strong growth in demand, due to better offers and the availability of more attractive cars, contributed to the 24 percent increase recorded by the overall market.
The latest Economic Survey revealed that India’s compulsory motor third-party insurance, due to the rising demand for passenger cars in the country, will multiply as India’s middle class expands and buys more cars. However, it should be noted that the Survey still hasn’t revealed any other details regarding the increase in the third-party motor insurance in the country.
The survey, quoting the Swiss Re Institute World Insurance report, said that India was one of the fastest-growing insurance markets in the world. In total premium volumes, it was the 10th largest globally in 2021, with an estimated market share of 1.9 percent and the second largest of all emerging markets.
Swiss Re Institute’s projection is based on expectations of strong economic growth, rising levels of disposable income, India’s young population, increased risk awareness and also digital penetration, and regulatory developments.