Automotive Industry
Helping Global Automotive Businesses Set Up and Scale in India
Few sectors illustrate India's industrial rise as clearly as automotive manufacturing. Over the past decade, the country has moved from being primarily an assembly base to a full-fledged design, engineering, and export hub for passenger cars, commercial vehicles, two-wheelers, EVs, and the components that go into them. Vehicle exports crossed 5.3 million units in FY25 alone — a figure that keeps drawing fresh attention from OEMs, battery makers, mobility-tech startups, and Tier-1 suppliers looking to build or deepen their India footprint.
That attention brings a familiar problem: knowing that India is worth entering is very different from knowing how to enter it. Which state fits a particular plant's logistics needs? Which PLI window is a company actually eligible for? What does an FDI-compliant holding structure look like once tax, FEMA, and sector rules are layered together? Agarwal U R S & Co. works through exactly these questions with automotive manufacturers, EV players, component makers, and mobility technology firms building a presence in India — turning sector potential into a workable, compliant plan.
The underlying case for India remains straightforward: a large and still-growing vehicle market, competitive manufacturing costs, an increasingly mature component ecosystem, and policy backing through Make in India, the Automotive PLI scheme, PM E-DRIVE, and state-level EV incentives. What varies from one company to the next is how much of that opportunity actually gets captured — and that gap is usually closed with the right advisory support, not more capital.
Why the Automotive Sector Keeps Choosing India
| Driver | What it means for a new entrant |
|---|---|
| Scale of demand | Rising incomes and urbanisation continue to expand demand across passenger vehicles, commercial fleets, two-wheelers, and shared mobility. |
| Export positioning | A cost-competitive supplier base makes India a viable production point for markets in Asia, Africa, Europe, and the Middle East, not just domestic sales. |
| EV momentum | Battery manufacturing, charging infrastructure, and EV-specific subsidies are opening a distinct set of opportunities beyond conventional vehicle-making. |
| Ownership flexibility | Automatic-route FDI up to 100% is permitted for most automotive manufacturing activity, removing a major structuring barrier for foreign parents. |
| Policy support | PLI disbursements, state-level capital subsidies, and industrial corridor development add a financial cushion to manufacturing investment decisions. |
Where Foreign Entrants Usually Get Stuck
The opportunity is real, but so are the friction points. In our experience, most delays trace back to one of the following:
- Reading the compliance stack correctly. FDI conditions, environmental clearances, labour law, and automotive-specific approvals rarely sit in one place, and missing one can stall a project by months.
- Picking a location without full information. A state's headline incentive isn't the same as its actual fit — logistics access, power reliability, and supplier proximity matter just as much.
- Localising the supply chain. Sourcing enough of the bill of materials domestically, without compromising quality, takes longer than most timelines assume.
- Leaving incentive money unclaimed. PLI and state subsidy schemes come with eligibility conditions and reporting obligations that are easy to underestimate — and easy to lose benefits over.
- Structuring cross-border transactions. Transfer pricing, GST, customs duty, and withholding tax questions need to be resolved before the first invoice, not after.
- Meeting ESG expectations from day one. Global parent companies increasingly expect Indian operations to report against the same sustainability frameworks used elsewhere in the group.
How We Help
We work across the full lifecycle of an automotive investment in India — from the first feasibility study to ongoing governance once the plant is running.
Entry Strategy & Business Setup
- Market sizing, competitor mapping, and feasibility studies to validate the India opportunity before commitment.
- Choice and structuring of the entry vehicle — wholly owned subsidiary, joint venture, or liaison/branch office — based on commercial objectives.
- FDI, FEMA, and sector-approval navigation, alongside identification of distributors, suppliers, and strategic partners.
- Tax-efficient holding structures built to support the next stage of growth, not just the initial setup.
Manufacturing & Location Advisory
- Site and state selection weighed against incentives, logistics, workforce availability, and existing supplier clusters.
- Support through land acquisition, industrial park selection, and plant implementation planning.
- Localisation roadmaps to build domestic sourcing without sacrificing quality standards.
- Coordination with state industrial development bodies and other relevant authorities.
PLI & Government Incentive Advisory
- Eligibility assessment across Automotive PLI and state-specific manufacturing incentive schemes.
- Application preparation, documentation, and ongoing compliance to keep approved incentives intact.
- Investment structuring designed around available benefits, and tracking of new incentive announcements relevant to the business.
Tax, Regulatory & Cross-Border Advisory
- GST, customs, and transfer pricing advisory for manufacturing, sourcing, and distribution activity.
- FEMA and RBI approval support for cross-border transactions and repatriation.
- Periodic tax health checks to flag exposure before it becomes a dispute.
Transactions, ESG & Governance
- Due diligence, valuation, and deal structuring for acquisitions, joint ventures, and strategic investments in the automotive space.
- ESG strategy, carbon footprint assessment, and BRSR/sustainability reporting aligned to group-level frameworks.
- Internal audit, enterprise risk management, and governance reviews suited to manufacturing and distribution operations.
Digital & Industry 4.0 Enablement
- ERP selection and implementation support (SAP, Oracle, and similar platforms).
- Roadmaps for automation, predictive maintenance, and connected-factory initiatives suited to Indian plant operations.
Automotive Segments We Work With
- Passenger and commercial vehicle manufacturers
- Electric vehicle and battery companies
- Auto component and Tier-1 suppliers
- Charging infrastructure providers
- Mobility technology and transportation startups
- Automotive aftermarket businesses
Country Desks for Automotive Investors
A meaningful share of our automotive advisory work is with companies entering India from a specific home market, each with its own recurring set of questions.
German Companies
German OEMs, engineering firms, and component suppliers typically come to us for manufacturing expansion planning, localisation strategy, and structuring industrial partnerships with Indian counterparts.
Japanese Companies
For Japanese manufacturers, the recurring need is market entry sequencing — factory setup, vendor identification, and incentive access handled in a way that fits long-established group governance practices.
US Companies
American automotive and mobility-tech businesses generally engage us around expansion of existing operations or evaluating acquisition targets as a faster route into the Indian market.
UAE Investors
UAE-based investors and automotive groups more often need investment advisory and joint-venture structuring support, since their India plays are frequently financial as well as operational.
Why Work With Agarwal U R S & Co.
Automotive investments touch tax, regulatory, manufacturing, and governance questions all at once — rarely just one of them. Our team is built to handle that overlap directly rather than routing a client between specialists, which keeps advice consistent and decisions faster. Whether the current need is a first feasibility study, a manufacturing incentive application, or a governance review three years after setup, we stay involved across that lifecycle rather than handing off at each stage.
Frequently Asked Questions
What is the fastest way for a foreign automotive company to enter India?
It depends on intent. A wholly owned subsidiary suits companies planning direct manufacturing; a joint venture is often faster where a local partner already has distribution or supplier relationships in place.
Is 100% foreign ownership allowed in Indian automotive manufacturing?
Generally yes — most automotive manufacturing activity qualifies for 100% FDI under the automatic route, subject to standard sectoral conditions.
What government incentives should a new manufacturer check for?
Start with the Automotive PLI scheme and then layer in state-specific capital subsidies and industrial incentives — the combination varies significantly by location.
Which states are currently strongest for automotive manufacturing?
Tamil Nadu, Maharashtra, Gujarat, Karnataka, Haryana, and Andhra Pradesh remain the most established clusters, though the right fit depends on the specific product and supply chain.
Do EV and battery manufacturers get separate incentives?
Yes, EV manufacturing, battery production, and charging infrastructure are supported through dedicated central and state programmes beyond the general automotive incentives.
At what stage should a company bring in an advisory partner?
Ideally before the entry structure is finalised — corrections made after incorporation or after a location is locked in are usually more expensive than getting the structure right upfront.
Considering an Automotive Investment in India?
If you're weighing market entry, manufacturing setup, an incentive application, or an acquisition in India's automotive space, we're glad to work through the specifics with you.
For Automotive Consultation: info@agarwalurs.com
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