Sector snapshot
India produced 34.7 million vehicles in FY2025-26 (SIAM via Autoguide India, April 2026). Every vehicle segment posted record sales: passenger vehicles 4.64 million (+7.9%), two-wheelers 21.7 million (+10.7%), commercial vehicles 1.08 million (+12.6%) and three-wheelers 836,000 (+12.8%). SIAM credits the GST 2.0 reforms and repo rate cuts.
India is becoming an export base. Passenger vehicle exports reached a record 905,000 units (+17.5%) and two-wheeler exports 5.18 million (+23.4%) in FY2025-26. Hyundai expects exports to reach up to 30% of its India production (The Machine Maker, 15 Oct 2025). Auto component exports were USD 24 bn, up 5% (ACMA via Autocar Professional, Jul 2026).
FDI equity into the automobile industry was USD 2.5 bn in FY2025-26 and USD 40.3 bn since April 2000 (DPIIT FDI Fact Sheet, March 2026).
Central incentives reward local value addition. PLI-Auto (₹25,938 crore) pays only on products with at least 50% domestic value addition; approved companies had invested ₹35,657 crore by 30 September 2025 (PIB, MHI Year End Review, 13 Jan 2026).
Cells and magnets are the next targets. The schemes now aim at the parts India still imports: battery cells, rare-earth magnets and advanced components. Of the 50 GWh offered under PLI ACC, 40 GWh has been awarded, but by January 2026 only Ola’s 1 GWh cell plant had been built. Bidding for the ₹7,280 crore rare-earth magnet scheme closed on 12 August 2026 (Fiinews, 15 Aug 2026). Both remain supply gaps even though the scheme capacity has been awarded or bid.
Where the opportunity is
Foreign capital is going into cars, components, EVs, cells and magnets. Volumes are at record highs, and central schemes pay for localising the parts India still imports. All six segments below are open to 100% FDI on the automatic route.
| Segment | What the sources show | Tag |
|---|---|---|
| Passenger vehicles | Sales of 4.64 million in FY2025-26 (+7.9%) and record exports of 905,000. Toyota plans a new plant at Bidkin, Maharashtra, with production from the first half of 2029 (Toyota, 11 May 2026); Hyundai plans ₹45,000 crore of investment by FY2030. | 100% automatic |
| Two- and three-wheelers | India sold 21.7 million two-wheelers and exported 5.18 million in FY2025-26. Three-wheeler exports rose 50.1% to 461,000 units, led by demand from Sri Lanka and Africa. | 100% automatic |
| Auto components | Turnover of ₹7.60 lakh crore (USD 85.9 bn) in FY2025-26, up 12.7%. Exports were USD 24 bn against imports of USD 25.4 bn, with China, Japan and Germany the largest suppliers. | 100% automatic |
| Electric vehicles and charging | PM E-DRIVE had supported the sale of 2.65 million EVs by 22 July 2026 (ANI, 4 Aug 2026). India has 52,718 public charging stations, of which 16,561 have fast chargers for cars (BHEL portal, July 2026, via Lok Sabha USQ 453). Invest India cites an aim of 30% EV sales by 2030. | 100% automatic; PM E-DRIVE |
| Battery cells | Of the 50 GWh offered under PLI ACC, 40 GWh has been awarded, but by January 2026 only Ola’s 1 GWh plant was built, in pilot production since March 2024. Advanced battery components are on the 60-day land-border FDI list (DPIIT SOP). | 100% automatic; PLI ACC; 60-day route |
| Rare-earth magnets and motors | The REPM scheme funds 6,000 tonnes a year of integrated sintered NdFeB magnet capacity, up to 1,200 tonnes per maker. 20 bids were received by the 12 August 2026 deadline. | 100% automatic; REPM |
Note: ₹1 crore = ₹10 million; ₹1 lakh crore = ₹1 trillion.
Who this guide is written for
The set-up route is written for a vehicle maker moving from imports to assembly to full manufacturing. A component or battery maker skips the import step and applies for the state package before investing; PLI-Auto is limited to its approved applicants. A maker with a land-border beneficial owner may use the 60-day route for advanced battery components.
How the sector pages fit together
- Recent investments: Japanese, Korean and Vietnamese carmakers adding Indian capacity since 2024, as public examples.
- FDI rules: the full cap-and-route table, the land-border rule and the 60-day fast-track list.
- Regulators and registrations: certification agencies, the domestic value addition certificate, EPR under the End-of-Life Vehicles Rules and charging.
- Central incentives: PLI-Auto, PLI ACC, SPMEPCI, REPM, PM E-DRIVE and the rest, with status as of 1 October 2026.
- State incentives: Tamil Nadu, Uttar Pradesh, Maharashtra, Karnataka and Haryana packages.
- Tax and zones: GST since 22 September 2025, customs on imported cars, the UK and EU agreements, Budget 2026-27 customs changes and the corporate tax tables.
- Set-up roadmap: the eight-step route from imported cars to local manufacturing, with the entry vehicle and incorporation points for this sector.
- What to watch: value-addition tests, ownership checks and scheme dates.
- Recent changes: what changed since 2025, by date.
- Sources: the full reference list.
What to check next
- Decide whether you enter with imports, assembly or full manufacturing; the route changes the duty, certification and incentive questions.
- Screen the ownership chain for land-border beneficial owners before planning the FDI route; see land-border investors.
- Test whether your products can reach 50% domestic value addition, as PLI-Auto pays nothing below it.
- Compare state packages early; several pay only for investment made after an application or policy date.
- Check the incentive tracker and updates for scheme windows that have closed or been extended since 1 October 2026.