Indian Auto industry in comparison with China
Auto industry is major driver of economy for any country. Not just car assembly but other small supply chain industries contribute heavily to GDP and create employment.
Total car sales in India for the year 2021 was at 3.8 million unites while in China it was 27 million units in 2021. Although we have similar number of population and roughly 2 times smaller PPP GDP still the size of automobile industry is around 7 times smaller.
India is 141 in the list of 189 counties when it comes to per capita car ownership. Unfortunately we are behind in terms of car ownership compared to African countries, Nepal and even bankrupt states like Sri Lanka.
In recent years auto industry in India has picked up pace but still there is lot of room for improvement. China that is no 1 auto industry in the world is far ahead of India in this regard.
China's success
This is mostly because of China's government supporting car ownership by various means. This includes tax breaks, world-class road infrastructure, consumer incentive programs, etc. Even banks in China give car loans at less than 4 percentage points, thus making car purchase affordable to more and more people. Even fuel is cheaper in China compared to India.
This booming consumer driven auto industry is helping China's GDP numbers and also it is helping other industries that depend on auto industry such as steel industry. Fun fact: Do you know China produces more steel than rest of the world combined?
Where India is lacking
In india things are opposite. Central and local governments put heavy taxes on cars, bank loans are expansive at 8 percentage points (double than that in China). On top of this add congress era idiotic 4 meter car tax law that has handicapped many car manufacturers and ofcourse the horrible state of roads and parking infrastructure in India being a major obstacle for car buyers. Gov has made fuel taxes as their money making cash cow thus hurting car sales in process.
Gov in India behaves as if Car ownership is some luxury and therefore must be discouraged. We are following European model. This is hurting our economy and industry. Auto industry contributes towards 50 percentage of all manufacturing output and 7.5 percentage of total GDP number in India. By incentivising this sector alone we can increase our industrial output and GDP by a good margin. But we aren't doing it.
Effects on GDP
GDP of China is dependent on 3 things. Real estate sector, Massive construction of public infrastructure, Auto industry. Unlike popular knowledge export industry helps China strengthen their currency and increase forex reserves but it is not a major driver of GDP in China.
In India our real estate sector is full of black money investments, infrastructure spending is somewhat increased under BJP but it is still far behind compared to India's size and auto industry is treated like a step child. And people wonder why our economy is growing so slow.