With nearly every car manufacturer in the country increasing capacity and the domestic market showing signs of slowing down, the industry is betting on a surge in exports.
The export of passenger cars from India is expected to touch one million by 2010, a shade lower than the last financial year's total domestic sales of 1.3 million, and nearly a third of the projected production of three million.
Last year, the country exported only 198,478 cars less than 13 per cent of the 1,544,850 produced.
"There is an urgent need to improve port facilities as well as the road and rail networks. The automobile industry pays Rs 1,000 crore extra due to infrastructure inefficiencies. We have been demanding two automobile export hubs in Mumbai and Chennai, each equipped to handle an output of 500,000 vehicles annually by 2015 to meet the targeted growth," said a senior functionary of the Society of Indian Automobile Manufacturers, the industry lobby.
Leading the charge is Hyundai Motor India, the Chennai-based subsidiary of South Korea's Hyundai Motor, which already is the largest exporter with 115,525 units, or 37 per cent of its production.
"By 2010, we will be producing 600,000 and exporting 200,000," H S Lheem, the company's managing director, told Business Standard just after the launch of Getz Prime.
Maruti Udyog, the largest player in the domestic market, is targeting a 27 per cent increase in exports this financial year by exporting 50,000 units. It hopes to double the figure to 100,000 next financial year. However, the big surge will come once Maruti launches its all-new export model for Europe in 2008-09 with a target of 200,000 units, taking its total exports to over 300,000.
"We will regain our export market. After September 2005, we had stopped exports to Europe, which we would re-enter in 2009 with an all-new compact car," said Jagdish Khattar, Maruti's managing director, at the recent launch of the SX4 sedan.
Auto analysts say the car makers would have to depend more on exports to maintain the compound growth rate of 20 per cent for the next few years. While Indian companies are expected to push their exports, major players such as Renault, Nissan Motors, HMIL, and General Motors have already announced their decision to make India their export hub.
Arvind Jain, analyst at Religare Securities, said: "Most of the Japanese and Korean companies have a ready overseas market and they will be shifting their manufacturing base to India."
Home-grown companies such as Mahindra and Mahindra and Tata Motors intend to increase their export competitiveness. "We are targeting to touch 1,000,000 mark in exports by 2010, of which about 20 per cent would be exported to South Africa, Russia, Brazil, Europe, and other emerging markets," said a senior Tata Motors executive.