India’s automotive ambition: From domestic powerhouse to global production hub
Once seen primarily as a fast-growing domestic market, India is now positioning itself as a critical hub for global vehicle production, exports and electrification
The shift is being driven by three key forces: scale, localisation and the transition to electric vehicles (EVs). Domestic players such as Maruti-Suzuki, Mahindra and Tata are capitalising on these trends, expanding capacity and strengthening their product portfolios, while international manufacturers are increasing investments to remain competitive in an increasingly crowded and complex market.
Maruti-Suzuki leads the charge with 4m unit capacity target
At the centre of this shift is Maruti-Suzuki, which remains thelargest vehicle manufacturer in India. The company produced approximately 2.25m vehicles in 2025, more than double the output of Hyundai-Kia. Looking ahead, it is pursuing an ambitious expansion strategy that will see its production capacity rise to nearly 4m units annually by 2028-29. A major part of this growth will come from a new plant in Sanand, Gujarat, representing a US$550m investment and eventually capable of producing one million vehicles per year.
Maruti-Suzuki is experimenting with new business models to stimulate domestic EV adoption, including a battery leasing scheme for the eVitara that separates the cost of the battery from the vehicle purchase price
Exports are becoming increasingly central to Maruti-Suzuki’s longterm strategy. The company is already a major exporter to Japan, supplying models such as the Fronx and Jimny, and has recently begun exporting the eVitara EV to Europe. Production for export will be concentrated in facilities such as Hansalpur and the new Sanand plant. At the same time, Maruti-Suzuki is experimenting with new business models to stimulate domestic EV adoption, including a battery leasing scheme for the eVitara that separates the cost of the battery from the vehicle purchase price. This approach reflects a broader effort to make EVs more accessible in a price-sensitive market. In addition to EVs, the company is also expanding exports of internal combustion engine (ICE) SUVs, while continuing to manufacture vehicles for Toyota, including the Ebella SUV.
Mahindra bets big on electric SUVs and a new Maharashtra mega-plant
Mahindra, the largest Indian-owned automotive manufacturer, is also investing heavily to expand its footprint. The company produced around 600,000 vehicles last year and is targeting further growth through a combination of new capacity, product development and electrification. It has committed approximately US$1.6 billion to new and expanded facilities in Maharashtra, including a new plant in Nagpur, scheduled to begin production in 2028, with annual capacity for 500,000 vehicles and 100,000 tractors, supported by a 150-acre supplier park.
In parallel, Mahindra is expanding its existing operations. Its Chakan plant near Pune will see capacity increase to as much as 750,000 units annually, including a dedicated EV production line with initial capacity of 90,000 units, potentially rising to 120,000 depending on demand. This line will produce new electric SUVs such as the BE 6e and XEV 9e, supported by an in-house battery assembly facility producing at least 5,000 units per month. The company is also investing in research and development, adding 2,000 jobs at its Chennai centre to support the rollout of its NU IQ multi-energy platform, which will underpin future SUV models from 2027.
Tata Motors eyes market share as its billion-dollar plant comes online
Tata Motors represents another key pillar of India’s automotive transformation, combining domestic manufacturing strength with global reach. As the owner of Jaguar Land Rover (JLR) and recent acquirer of Iveco, Tata has a more international profile than its domestic peers. In India, it produced nearly 600,000 passenger vehicles and around 180,000 commercial vehicles last year, although it suggests its current production run rate is closer to 900,000 units annually, with ambitions to reach one million units in the near future.
A major milestone in Tata’s expansion is the opening of a new US$1 billion plant in Panapakkam, Tamil Nadu, in early 2026. This facility, developed in collaboration with JLR, will produce next-generation EVs and has an annual capacity of 250,000 units. Initially, it is assembling the Range Rover Evoque from imported kits, with production transferred from Pune. The plant is expected to employ up to 5,000 people and generate significant additional employment across the supply chain. Tata is investing around US$4 billion in EV development and production, focusing on SUVs and crossovers. It plans to launch at least five new EVs by 2030, including models under its new Avinya brand, while also updating existing offerings such as the Punch and Sierra EVs.
These product and investment plans are central to Tata’s ambition to increase its market share to 16% by 2027 and 20% by 2030. Achieving these targets will be challenging, particularly given the strength and expansion plans of Maruti-Suzuki, but Tata could gain ground at the expense of smaller international competitors rather than the market leaders. While domestic manufacturers are gaining ground, global OEMs remain deeply committed to India. Hyundai and Kia, for example, are pursuing an aggressive growth strategy centred on localisation, product expansion and exports. Hyundai has designated India as a core production and R&D hub and raised US$3.3 billion through an IPO of its Indian operations, providing both funding and greater local financial independence. The company is now investing US$5 billion over five years to expand capacity, increase exports and boost revenue by more than 30% by 2030.
Hyundai and Kia double down on localisation and a major SUV offensive
A key part of Hyundai’s strategy is a significant product offensive, including at least seven new models and 18 refreshed vehicles, with a strong focus on SUVs and MPVs. It also plans to introduce EV production in India by 2028. Capacity expansion is underway at its Pune plant, acquired from General Motors, which will increase output from 170,000 to 250,000 units annually by 2028. Meanwhile, its Chennai facility, with capacity exceeding 800,000 units, continues to play a central role, offering flexible production across ICE, hybrid and electric powertrains. Hyundai has also made substantial progress in localisation, with a high proportion of suppliers located near its plants and most parts deliverable within hours.
Kia, by contrast, is taking a more measured approach, currently relying on its single plant in Anantapur, which produces most of the vehicles it sells in India. Its EV offerings remain limited to imported models, reflecting a more cautious investment stance compared to Hyundai.
While Toyota continues to rely on Suzuki for certain models, including rebadged versions of Suzuki vehicles, its capacity expansion signals a desire for greater independence and control over its Indian operations
Toyota invests in a fourth plant and focuses on EVs and hybrids
Toyota is also expanding its presence in India, balancing its longstanding partnership with Suzuki with efforts to increase its own production capacity. Through its joint venture with Kirloskar, Toyota operates two plants in Bidadi, near Bengaluru, with combined capacity of around 340,000 units annually. A third plant, due to open in 2026, will add a further 100,000 units, bringing total capacity to around 400,000 units. This expansion is supported by an investment of approximately US$376m and will create around 2,000 jobs.
Looking further ahead, Toyota plans to build a fourth plant in Maharashtra, focused on EVs and hybrids, which will increase capacity to around 500,000 units annually. This facility, involving investment of around US$2.4 billion, is expected to create 8,000 direct jobs and up to 18,000 indirect jobs. While Toyota continues to rely on Suzuki for certain models, including rebadged versions of Suzuki vehicles, its capacity expansion signals a desire for greater independence and control over its Indian operations.
Honda looks to exports to compensate for weak domestic demand
Honda, in contrast, remains a relatively small player in India, producing fewer than 100,000 vehicles annually. However, the company sees India as a strategically important market, ranking it behind only the US and Japan. Honda is focusing on exports as a key growth driver, already shipping vehicles such as the WR-V (Elevate) to Japan and planning to export future EV models. Its export network spans 33 countries, with significant volumes going to Japan, Africa, Mexico and Turkey.
Domestically, Honda is aiming to expand its product line-up, particularly in the SUV segment, with plans to introduce four new models by 2030, including an electric version of the Elevate. It also aims to double production capacity to around 200,000 units annually. However, weak domestic sales mean exports will play a crucial role in achieving these targets.
Overall, India’s automotive sector is becoming increasingly competitive and strategically important. Domestic manufacturers are consolidating their position through scale and innovation, while global players are investing heavily to maintain relevance. The coming decade will likely see further consolidation, increased electrification and a growing role for India in global automotive production and exports.
