India

Last modification: 1 Jul 18

Chapter 1: Economic and business environment

Demographics

1.311.050.530

Capital

New Dehli

Major cities

Mumbai, Kolkota, Chennai, Bengaluru, Hyderabad, Ahmedabad

Languages

English (en-IN), Hindi (hi), Bengali (bn), Telugu (te), Marathi (mr), Tamil (ta), Urdu (ur), Gujarati (gu), Kannada (kn), Malayalam (ml), Oriya (macrolanguage) (or), Panjabi (pa), Assamese (as), Bihari (bh), Santali (sat), Kashmiri (ks), Nepali (macrolanguage) (ne), Sindhi (sd), Konkani (macrolanguage) (kok), Dogri (macrolanguage) (doi), Manipuri (mni), Sino-Tibetan languages (sit), Sanskrit (sa), French (fr), Lushai (lus), Indic languages (inc

GDP

1,581.59 USD (2015)

Unemployment rate

3,4% (2017)

Main industries

GDP Composition by Sector:
Agriculture (16.1 percent)
Industry (28.6 percent)
Services (55.3 percent)
Industrial Production Growth Rate: 9.7 percent
Industries: textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, pharmaceuticals

Currency

 INR Indian rupee

Interest rate

7,3%

Inflation

2.99% (2017)

Chapter 2 : Automotive market, segments & sales

Total Car park

32 cars per 1000 inhabitants

New vehicle registrations (Cars, LCV, Trucks)

New Car Sales 2015 : 3,061,406

Top 5 brands (total market)

1.Mahindra
2. Maruti
3. Suzuki
4. Hyundai
5. Tata
6. Toyota

Chapter 4: Taxation & legislation

4.1 Car Taxation
India has a state-specific car tax (2% to 18%)

The government of India has unified a number of indirect taxes with different rates depending on the state and introduced the Goods and Services Tax (GST), which is applicable throughout the nation, on July 1, 2017. Under the new regime, the GST rate of 28% is applied to most vehicles, while electric vehicles have 12% applied. In addition to the GST, a tax is levied to compensate the tax revenue losses. With the introduction of the GST, total tax rates have fallen significantly for most automobiles excluding hybrid vehicles. Many automakers tried to stimulate demand for vehicles by reducing prices.
 
GST and compensation cess introduced in July 2017
Goods and Services Tax (GST)
The Goods and Services Tax (GST) is an indirect tax that was introduced in India on July 1, 2017 and is applicable throughout the country. 17 taxes and 23 special taxes for specific purposes such as welfare were unified under the GST. The tax rates, which had been different depending on the state, were standardized, and complicated tax schemes were eliminated. The GST rate of 28% is applied to passenger and commercial vehicles and automotive parts, while the rate of 12% is applied to electric vehicles (including motorcycles and tricycles).
 
 
Compensation Tax
A compensation tax is levied in addition to the GST on specific items to compensate for the resulting tax revenue losses on the part of the states. The tax rates were set at 1-3% for small vehicles and 15% for mid-size and large vehicles (see the Table below). With a tax rate of 15%, hybrid vehicles attract a total tax rate of 43.0%, which has been raised from the total indirect tax rate of 30.3% in the pre-GST regime.
 
Compensation cess rate raised in September 2017
Increase in tax rate for mid- and large-size cars and SUVs
A compensation tax is levied in addition to the GST on specific items to compensate for the resulting tax revenue losses on the part of the states. The tax rates were set at 1-3% for small vehicles and 15% for mid-size and large vehicles (see the Table below). With a tax rate of 15%, hybrid vehicles attract a total tax rate of 43.0%, which has been raised from the total indirect tax rate of 30.3% in the pre-GST regime.
 
 
 
Segment Until June 2017 After June 2017 After September 2017
Total Breakdown Total Breakdown
Small car
(length< 4m; Petrol <1200 cc) 30.2% 29.0% GST 28.0% 29.0% GST 28.0%
Cess rate 1.0% Cess rate 1.0%
Small car
(length < 4m; Diesel < 1500 cc) 30.2% 31.0% GST 28.0% 31.0% GST 28.0%
Cess rate 3.0% Cess rate 3.0%
Mid-size car
(Engine displacement <1500 cc) 47.3% 43.0% GST 28.0% 45.0% GST 28.0%
Cess rate 15.0% Cess rate 17.0%
Large car
(Engine displacement >1500 cc; excluding SUV) 49.0% 43.0% GST 28.0% 48.0% GST 28.0%
Cess rate 15.0% Cess rate 20.0%
SUV
(Engine displacement >1500 cc; Ground clearance >170mm) 55.3% 43.0% GST 28.0% 50.0% GST 28.0%
Cess rate 15.0% Cess rate 22.0%
Hybrid vehicle (HV) 30.3% 43.0% GST 28.0% 43.0% GST 28.0%
Cess rate 15.0% Cess rate 15.0%
Electric vehicle (EV) 12.0% 12.0% GST 12.0% 12.0% GST 12.0%
Cess rate 0.0% Cess rate 0.0%


4.2 Income Tax - Taxable person
Any person who registers a vehicle is considered a taxable person (physical or legal person)

4.3 Company Car Taxation
Company cars and related costs are 100% deductible from the CIT

4.4 Income Taxes

4.5 Electric vehicles

4.6 Future developments

4.7 Legal background
India has 5 types of duties mouning to 125% of the value of the vehicle

4.9 Electric vehicles

12%
 

Chapter 5: Car policies

Company Car entitlement
Most often based on job need

Which sectors provide most fleet cars?
Agriculture, Chemical Industry, Pharmaceutical Industry

Reference cars:
Entry / Junior level: Maruti Suzuki Swift Dzire, Mahindra Scorpio, Toyota Innova
Senior sales / mangement level: Toyota Innova, Mahindra, Maruti, 
Executive level: European makes

Chapter 6: Funding methods

Overview of penetration of funding methods (buy or lease statement)  
Type of suppliers (captive versus multibrand, international versus local…) Finance leasing is offered by financial institutions, Operational Leasing by (mainly European) Leasing Companies
6.1 Outright purchase:  
Definition The acquisition of a vehicle and the creation of a fixed asset on the balance sheet
Pro’s and con’s Practically difficult to manage.
Economic & legal ownership Full ownership, included Risks asd Rewards
Business practices  
6.2 Renting (Finance lease) :  
Definition Finance Lease is called "Hire Purchase"
Pro’s and con’s Useful life and depreciation are submitted to strict rules
Economic & legal ownership Risks and Rewards are transferred to the lessee, legal ownership remains with the lessor
Business practices  
6.3 Full service leasing (operational leasing)  
Definition Is a lease that does not transfer risk and reward to the lessee
Pro’s and con’s Fully deductible from the CIT
Economic & legal ownership Ownership remains with the lessor
Business practices Operational Lease is still marginal (less than 5%)
6.4 Fleet Management  
Definition Uncommon product in India and refers most often to the practical handling of vehicles (transport, cleaning, chauffeur services,…)
Pro’s and con’s  
Economic & legal ownership The fleet management company has no claim of ownership on the vehicle.
Business practices  
6.5 Short term rental  
Definition STR is popular, but not easily availabel in India. Small local players dominate the market next to a limited number of larger international players. Although easy to book for a single car, it's still complicated to order larger batches of vehicles 
Pro’s and con’s P:ricing is very local, as taxation in India is not harmonized. Vehicles can be rented with or without English speaking driver. Prices are not cheap, but service is personal and good, in general.
Economic & legal ownership  
Business practices  
6.6 Other funding methods  

Chapter 7: Fuel

Fuel type segmentation

Fuel price evolution

2012: 0.65 USD/L , 2014: 0.54 USD / L, 2016: 0.53 USD / L, 2018: 0.47 USD / L

Fuel infrastructure
2 main fuel suppliers dominate the market (Hindustan and IOC). As they divide the market in 2 monopoly type of segmentation, it's difficult to obtain discount schemes.

Fuel card solution
Available and good

Chapter 8 : TCO components

TCO is not yet a recognized concept in India. Buyers focus on purchase price and compare total of lease fees with a purchase price.

Chapter 9: Safety, insurance and telematics

9.1 Accident Rate

2013 Data (most recent data available)
Road fatalities per1000,000 inhabitants per year :  16.6
Road Fatalities per 100,000 motor vehicles: 130.1
Total Fatalities latest year (WHO Report): 137000

One serious road accident in the country occurs every minute and 16 die on Indian roads every hour.

1214 road crashes occur every day in India.

Two wheelers account for 25% of total road crash deaths.

20 children under the age of 14 die every day due to road crashes in in the country.

377 people die every day, equivalent to a jumbo jet crashing every day.

Two people die every hour in Uttar Pradesh – State with maximum number of road crash deaths.

Tamil Nadu is the state with the maximum number of road crash injuries

Top 10 Cities with the highest number of Road Crash Deaths (Rank –Wise):

Delhi (City)
Chennai
Jaipur
Bengaluru
Mumbai
Kanpur
Lucknow
Agra
Hyderabad
Pune

9.3 Insurance Suppliers

Bharati AXA Car Insurance, Royal Sundaram Car Insurance, Reliance Car Insurance, TATA AIG Car Insurance, Bajaj Allianz Car Insurance

9.4 Telematics Availability

Vehicle telematics is gaining popularity mainly due to its advantages
such as safety, information, navigation and remote diagnostics

> The Indian telematics industry is highly competitive
> The competitive environment is further expected to intensify with increasing product extensions, more advanced offerings, technological innovations and M&A
> Trimble is the market leader with 30% market share.
The top three players (Trimble, Arya Omnitalk and CMC Technology) account for ~60% of the total market share
> To remain competitive in the market, vendors not only have to develop new technologies but also keep abreast of global developments and emerging technologies that could potentially impact their product portfolio

Chapter 10: Environment

10.1 Trends in Taxation, Legislation

The new National Auto Policy will soon include taxation for automobiles based on their CO2 emissions. This move comes as a push towards green mobility by the government.
The government of India is moving towards green mobility in the country. These steps towards taxation based on CO2 emissions is just one of the many steps by the government. The FAME scheme is also another move, towards the vision of green mobility in India.
 
10.2 CO2 figures
None available
 
10.3 Green Vehicles
Government pursuing India's transition to electric mobility by 2030
In March 2017, the government of India startled OEMs by revealing its plan for all new vehicle sales in the country to be electric vehicles by 2030. Electric vehicles accounted for only 0.02% of the Indian vehicle market during the period April 2017-January 2018. Many OEMs are skeptical of the feasibility of the government's target. SIAM predicts that 40% of new vehicle sales will be electric vehicles by 2030. In February 2018, some Indian papers reported that the government dropped its plan to push sales of electric vehicles only by 2030. The government was reported to announce that it would not formulate a separate policy to promote electric vehicles but prepare action plans instead.
 
Mahindra, the sole manufacturer of electric vehicles in India, unveiled a roadmap for electric vehicle technology and products in line with the government's plan for rapid adoption of electric vehicles. The automaker also plans to make an additional investment of INR 5 billion at its Chakan plant for the production of electric vehicles. In November 2011 Toyota and Suzuki announced a partnership to launch electric vehicles in India around 2020.
 
 

Chapter 11: Mobility

11.1 Traffic Conditions

Conditions of roads across India are not hidden. In the last 50 years, India's automobile population has grown 170 times while the road infrastructure has expanded only nine times. The country's vehicle population is over 5.5 crore and growing at a phenomenal rate of 25 lakh every year. Roads make up 4% of Kolkatta city as compared to 25% in Delhi and 30% in some other cities. Outside the metros, the main roads and other roads are poorly maintained and congested.
 
The main roads are narrow and in poor conditions, most of them lacking overpasses for intersecting roads. They are used for sleeping, walking and somewhere down the lane serve as "Temporary Shops". Vendors often encroach upon streets and block sidewalks, restricting traffic. In the last 50 years, India's automobile population has grown 170 times while the road infrastructure has expanded only nine times. While roads are widened to allow the increase in vehicle population, side-walks for pedestrians have shrunk. The pedestrian's right of way at zebra-crossings is something of a dream, making "Jay Walking" a common phenomenon.
 
More than 70% of demand for mobility is still largely served by non-motorized public and commercial modes of transit.
 
11.2 Mobility conditions for employees
Driving Car, Motercycles and Taxi.
A survey by LinkedIn reveals that 78 per cent Indians desire a shorter commute time This sentiment of desiring a shorter commute was the highest in India amongst 11 countries globally 42 per cent Indians would be willing to consider longer commute for 20 percent increase in their income
 
11.3 Mobility Solutions
Car Sharing, UBER, TAXI and Car Pooling are Avaiable. But due to the trafic conditions, none of the mobility solutions are reliable
 
11.4 Smart Cities
No.
much of this technology is being developed for the orderly streets of the West. India would be the last place to get driverless cars after experiencing Delhi traffic.
 .

Chapter 12: Key trends to watch