TL;DR
Niti Aayog advises India to cut tariffs and shift automotive production towards passenger vehicles to increase its share in the global export market.
A recent 'Trade Watch Quarterly' report by Niti Aayog suggests that India must implement tariff cuts, promote two-way trade, and align production with high-demand segments like passenger vehicles to strengthen its competitiveness and boost automotive exports. While India's backward integration into global value chains has improved, rising from 32% in 2015 to 46% in 2024 due to increased use of imported intermediates and EV-related inputs, its share in the $2.2 trillion global automotive imports remains at a modest 1.4%.
The report highlights a strategic mismatch between India's export composition and global demand. Passenger vehicles constitute approximately 71% of global automotive trade, yet India's share in this segment is only about 1%. In contrast, motorcycles account for just 3% of global demand, but India holds a stronger 9% export share. To address this imbalance and scale quality output, Niti Aayog emphasizes the need for India to upgrade standards, technology, and supply-chain linkages, moving away from a historically protected market structure towards deeper global integration.
