Indian authorities are working toward a more "hassle-free" movement of goods. In July 2017, the Goods and Services Tax (GST) went into effect with the goal to reduce interstate variations of taxes levied. - Photo courtesy of Naveen0301 via iStockphoto.com

Indian authorities are working toward a more "hassle-free" movement of goods. In July 2017, the Goods and Services Tax (GST) went into effect with the goal to reduce interstate variations of taxes levied.

Photo courtesy of Naveen0301 via iStockphoto.com

Concerns about vehicle emissions, improvements needed for economic corridors, lack of consumer use of public transit, and road, driver, and pedestrian safety are all top-of-mind for India’s transportation market. Meanwhile, fleet sales in the country increased slightly.

At over 230 million registered vehicles in 2016, India has seen a nearly 10% average annual increase in registered motor vehicles over the last 10 years, with experts anticipating this near-double-digit growth to continue through 2019. Fleet sales grew to 713,170 new units in 2018 but accounted for only 3.7% of total vehicle sales, according to India’s Federation of Automobile Dealers Associations (FADA).

While sales dipped at the end of 2018, FADA president Ashish Harsharaj remained positive for the upcoming fiscal year. "Customer interest is still healthy, indicating sales will come back in its previous growth trajectory sooner than later," he said in the organization’s December report.

What India is Buying

Not including motorcycles and mopeds, India was at about 28 total motor vehicles per 1,000 people compared to that of the U.S., which owns the world’s highest rate at 790 per 1,000 people, according to the latest World Road Statistics. Compared to other developing countries, India is still low on the list, trailing Brazil at 299 and China at 93, for example.

India’s five most popular vehicles are built by Maruti Suzuki, an Indian subsidiary of Japan’s Suzuki Motor Corp. The Dzire compact sedan taking the top spot in 2018. This move pushed the Alto, a subcompact, down to second for the first time in 13 years, reflecting a trend toward larger, more feature-rich vehicles. Third place went to the subcompact Swift; fourth was the Baleno, a premium hatchback; and fifth place belonged to the Vitara Brezza, a compact SUV. The Swift was named 2019 Indian Car of the Year by a panel of automotive editors.

Taxation and Infrastructure

Indian authorities are working toward a more "hassle-free" movement of goods. In July 2017, the Goods and Services Tax (GST) went into effect with the goal to reduce interstate variations of taxes levied. Preliminary reports show the GST is expected to lower the cost of transportation.

Prior to the enaction of the GST, a wide range of state-by-state and city-by-city tax rates was applied to motor vehicles and fuel. Varying schemes meant a car could be taxed by weight in some areas and by engine capacity. The result was a motor vehicle tax that could range anywhere from 2% to 21% depending on which state or city it was purchased.

Coupled with the GST are other improvements helping the commercial sector such as electronic tolling systems and "E-way bills," which have streamlined goods movements above a certain value across all states. In a January 2019 report from PwC, 51% of surveyed business owners cite an increased ease in logistics and related process since the start of GST and other improvements.

Industries to Watch in India

Around 10.8 million jobs were created in India in 2017. Top sectors include:

  • Software and financial services
  • Software and hardware manufacturing
  • Telecommunications
  • Energy
  • Construction
  • Automotive
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