India Emerging as Key Car Manufacturing Hub

India is emerging as a major car manufacturing hub, with giants like Toyota, Honda, and Suzuki investing billions of dollars. These companies are making India a key manufacturing hub, prompting Japanese automakers to reconfigure their global supply chains to reduce their dependence on China.

Toyota and Suzuki, the world’s largest carmakers, plan to increase manufacturing and exports in the third-largest auto market with nearly $11 billion in investments.

The move away from China is driven by fierce competition there, as a price war among Chinese EV makers hampers Japanese automakers’ growth and profits. China’s expansion into Southeast Asia also threatens Japan’s market dominance.

Japanese firms are reorganising global supply chains to reduce reliance on China. Meanwhile, India’s protectionist policies block Chinese car imports, offering Japanese companies a temporary shield from competition.

India’s market potential is attracting Japanese companies due to its abundant labour pool, low manufacturing costs, and a rapidly growing market. Additionally, the PLI scheme introduced by Narendra Modi aims to attract foreign manufacturers to produce goods for both domestic consumption and global markets.

Toyota, Honda, and Suzuki are making significant investments to strengthen their market position. Toyota has invested $3 billion to increase capacity and plans to build a new plant, aiming to produce over 1 million vehicles annually in India before 2030 and launching new models.

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Honda is keen to invest in its four-wheeler business in India and plans to utilise the country as a production and export hub for an electric car starting in 2027. In collaboration with Suzuki, Honda aims to increase its production capacity to 4 million cars and is investing $8 billion to develop India as a global production and export centre.