The Indian mobility sector is a true growth engine and is at the threshold of major change. The industry has effectively changed gears from "Small is Beautiful" to "The Bigger the Better," as SUVs have taken the place of low cost-and-cheerful subcompact hatchbacks.

The growing economy, higher disposable income, rising aspirations of the middle class and the rapid pace of infrastructural developments is accelerating this trend. In 2023, India may again surpass Japan to become the 3rd largest car market in the world.

Ambitious policy initiatives and industry support extended by the current government provides strong impetus for the industry to excel in the right direction. India is committed toward a final goal of net zero emissions, and the automotive sector is a key contributor in leading the task of carbon footprint reduction. From adopting cleaner fuels, making more efficient vehicles, and switching to electric vehicles, the Indian automotive industry is leading the decarbonization journey. The Indian automotive sector has developed innovative solutions by providing efficient "long haul" and "last mile" connectivity.

But while the industry is poised to continue this growth trend in the future, it will be challenged by infrastructure hurdles, particularly within cities. Urban centers are India's growth engines; however, due to the massive influx of cars in cities, hyperlocal commuting challenges like congestion and pollution are detrimental to the India Growth story. This will make personal mobility far more important than individual car ownership, spurring demand for public transport and new and innovative shared mobility solutions.

In a heterogenous market like India there will always be diversity in consumer needs - especially depending on the region of the country. Consumer adoption and penetration of technologies like ICE, BEV, hydrogen, flex fuel, biofuel, and natural gas each could have specific regional presences based on local infrastructure and grids.

In India, the world's most populous nation, the mobility of 1.4 billion people will be defined in line with improvements in infrastructure, investment, innovation, and inclusivity.

Additional detail from this forecast and other industry trends identified for India by various S&P Global divisions can be found in our Look Forward report, published today. The S&P Global Mobility excerpt can be found here.

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.