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India’s automobile sector is set to post double-digit growth in FY22 after remaining sluggish for 2 year: Crisil

Finally, India's automobile industry has reasons to cheer

After two years of sluggishness, India’s automobile sector is set to post double-digit growth in the next financial year, a Crisil study said. The growth will be supported by improving economic growth and personal incomes, it noted.

Passenger vehicles (PVs), two-wheelers (TWs) and commercial vehicles (CVs) are expected to see 23-25 per cent 18-20 per cent and 34-36 per cent volume growth respectively, next fiscal, compared with contractions of 3-5 per cent, 12-14 per cent, and 19-21per cent respectively, in the current fiscal.

“Our analysis of 800 listed companies shows salary cuts made in the first quarter of this fiscal have largely been restored by the manufacturing sector, while the IT sector is continuing to offer raises. Consequently, sentiment among urban consumers, who account for a crucial 65 per cent of PV sales and 40 per cent of TW sales, has improved. This, and buoyancy in rural income, augur well,” Pushan Sharma, associate director, Crisil Research, said in a statement.

According to an Invest India study, the $118 billion automobile industry is expected to reach $300 billion by 2026.

India's annual production has been 30.91 million vehicles in 2019 as against 29.08 million in 2018, registering a healthy growth of 6.26 per cent, the study said, adding that the country is expected to emerge as the world’s third-largest passenger vehicle market in the next few years.