Be Prepared For Stronger Competition As Global Carmakers Enter India: Goyal

India will encourage more global carmakers to enter the country, but expects them to manufacture locally and use India as a base for exports, Commerce and Industry Minister Piyush Goyal said.

Speaking at the annual convention of the Society of Indian Automobile Manufacturers (SIAM), Goyal asked existing manufacturers to prepare for stronger competition in the domestic market.

“We are going to encourage more and more global car companies to come to India,” Goyal said. “We are going to expect them to enjoy the fruits of not only the large market, but use the economies of scale to serve global markets.”

“Bear in mind, the competition is going to come strongly at all of you,” he added.

Goyal did not identify any country or company. His remarks come as Chinese vehicle and component manufacturers explore investment opportunities in India and seek to expand outside their home market.

They also precede the BRICS Summit, which India will host in New Delhi on September 12-13.

Investments by Chinese companies remain subject to prior government approval under Press Note 3, introduced in 2020 for countries that share a land border with India.

The government eased parts of the framework earlier this year, allowing global funds with non-controlling Chinese ownership of up to 10% to invest through the automatic route, subject to sectoral conditions.

It subsequently clarified that the relaxation was intended to address investments by global funds with small Chinese shareholdings. It did not allow entities registered in China or Hong Kong to invest through the automatic route.

Earlier investment proposals from Chinese automakers have faced regulatory hurdles, while SAIC Motor entered into a joint venture with JSW Group for its MG Motor India business following government approvals.

Goyal’s comments open the door to greater participation by international carmakers, with local manufacturing and exports forming part of the expectation from new entrants. Proposals involving Chinese companies would continue to be considered under the government approval route.

The minister said automakers could no longer remain focused only on domestic demand as the competitive environment changed.

“Gone are the days when we could look at the domestic market and satisfy the domestic market,” Goyal said.

He said companies that prepared for changes in technology and global manufacturing would be better placed to benefit.

“For those who see the future and plan for the future and grab the opportunity, it will be wonderful times ahead,” Goyal said. “For those who remain in the cosy comfort of their current business or market, it may become too late.”

“The agile, the nimble companies will gain. The people who remain laggards will miss the bus,” he added.