Asia-Pacific countries have contributed to growth of the global automobile sector. Developing Asia Pacific region will contribute 62.2% of auto and auto components sector growth for the period 2015-19. The quantitative growth in this region is expected to reach 101mn units in 2017 at a CAGR of 5%. India is a significant contributor from this region with a potential to become the 4th largest automobile producer by 2020. Automobile sector contributes 7.1% to the Indian GDP and was more than 45% of manufacturing GDP in FY14. Karnataka is the 4th largest state in automotive production with output of USD 2.8 bn, contributing 8.5% to national sector output. The automotive industry provides employment to more than 55,000 workers in the state of Karnataka.

1. AUTO & AUTO
COMPONENTS
Sector Profile

2. Foreword
Shri. R.V.
Deshpande
Hon’ble minister
for Large and
Medium
industries and
tourism
Automotive industry in Karnataka is at the cusp of high
growth. Workforce in Karnataka has the right set of skillset
required for an industry like automotive. With large number
of engineering colleges, R&D institutes and ITIs, Karnataka
has the potential to become the automotive manufacturing
and research hub of the country. Automobile manufacturing
has been identified as a focus sector in the new Industrial
Policy 2014-19 allowing the investors in the sector to reap
extra set of incentives, showcasing the state’s commitment
to emerge as a leader in the sector.
I heartily invite the investors to come and invest in the
potential offered by the state.

3. Content
1 Highlights
2 Sector Snapshot
3 Karnataka’s Unique Advantage
4 Government Initiatives and Policy
Support
5 Investment Opportunities

4. Highlights

5. Highlights
Karnataka – Home to a vibrant automobile
industry
• Karnataka is the 4th largest automobile producing state in
the country contributing 8.5% to national output.
• Karnataka has three auto clusters, one industrial valve
cluster and one auto component cluster.
• Wide ecosystem including OEMs, component
manufacturers and R&D Centers.
• Large local market and connectivity to top national and
international markets.
• The state has highly skilled workforce across the value
chain owing to 1400+ ITIs, 200+ engineering colleges
and 400+ R&D institutes.
IMAGE

6. Highlights
Government Initiatives and Policy Support
6
Government of Karnataka has identified Automotive as one of the focus sectors in the
Industrial Policy 2014 - 19
Karnataka Automobile
Research &
Innovation Centre is
proposed to be
developed. The centre
would also be an
incubation centre.
The government has
prioritized
improvement of
Mangalore port and
improve its
connectivity to major
industrial clusters in
the state.
OEMs are given
opportunity to partner
with ITIs to provide
sector specific training
and skill upgradation.
Sectoral Training
Institute for auto
proposed to be set up
in Bidadi/Narsapura.
To encourage
manufacturers of
Hybrid and Electrical
Vehicles it is proposed
to reduce road tax,
registration tax as
indirect incentives.
Single Window Clearance Mechanism
To facilitate new investments in obtaining in
principle approvals and other approvals from
other departments & organisations, through a
software e-udyami.
Export Related Incentives
Exporters with good track record issued Green
Card to enable smooth movement of goods
without any delay at check posts/verification of
documents.

7. Sector Snapshot

8. Asia-Pacific countries are contributing 62% to global
growth of automobile sector led by booming local
demand in India and China and worldwide exports
Source: Automobiles: The economic outlook and employment situation, PwC
Expected to reach 101 mn units in 2017 with CAGR of 5%

9. India is expected to become 4th largest automobile producer
by 2016
4
Source: ACEA
Greater
China
27%
Europe
23%North
America
19%
South Asia
9%South
America
4%
Japan,
South
Korea
19%
Middle East
2%
The share of World Motor production (2014)

10. 5
IMAGE
1st in tractor and 3 wheeler production
2nd in two wheeler production
5th in commercial vehicle production
6th in passenger car production
USD 3 bn investment planned in 2012 – 17
Source: ACMA

11. 7.1%
contributio
n to GDP
13% of
excise
revenues
8% of the
country’s
R&D
expenditure
USD 13.48
bn FDI
(Apr ’00 –
Jun ‘15)
Output of
USD 63 bn
Total
investment
in excess of
USD 35 bn
4.3% of
overall
exports
Growth in Automobile Industry is a major success story for
manufacturing sector in India
More than 45%of the
manufacturing GDP of India
(FY14)
Direct and indirect employment in
excess of 19 million
5% of cumulative FDI inflow
(2000-2015)
27%of India’s industrial GDP
(Industrial GDP includes manufacturing, mining and utilities)
Source: REVIEW OF AUTOMOTIVE MISSION PLAN 2006 - 2016

12. Automobile Production Trend (in million units)
14.06
17.9
20.4 20.6 21.5 23.4
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Passenger Vehicles Commercial Vehicles
Three Wheelers Two Wheelers
Grand Total
Source: SIAM
CAGR : 11%
Domestic sales constitute more than 80% of the automobile
produced in India
• Indian Automobile Manufacturing is
dominated by two wheelers (81%)
followed by passenger cars (13%)
• Automobile production has more
than doubled from 11.17 million in
2009 to 23.4 million in 2015
Category Major Players in India
Passenger Cars Maruti, Hyundai, Tata, Toyota, Honda,
Mahindra, Renault-Nissan, Volkswagen,
Skoda
Two Wheelers Bajaj, Hero, Honda, TVS
Commercial Vehicles Tata, Mahindra, Ashok Leyland, Eicher,
Volvo, Diamler Benz, Scania
Three Wheelers Piaggio, Mahindra, Bajaj
81%
13%
3% 3%
Market Share of Different Categories (2014-15)
Two Wheelers Passenger Cars
Commercial Vehicles Three Wheelers
Source: SIAM

13. Two Wheelers is the biggest segment of the Indian
automobile industry
10.5
13.3
15.4 15.7
16.8
18.4
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Two Wheelers Production Trend (in million units)
CAGR : 12%
1.1
1.5
1.97 1.95
2.1
2.5
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Two Wheelers Export Trend (in million units)
CAGR : 18%
CAGR of two
wheelers exports
over last 6 years
18%
Market Share for
Two-wheelers in the
domestic market
80%
Share in Automobile
Exports of Two
wheelers in FY15
70%
Two-wheeler production is projected to rise from 18.4 million in
FY15 to 32 million by FY20

14. Domestic passenger car market growth is driven by booming economy
and burgeoning disposable income in the middle class
2.3
3 3.1 3.2 3.1 3.2
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Passenger Cars Production Trend (in
million units)
Passenger Cars Market Segment Distribution (2012)
64%
25%
11%
Compact
Multipurpose and Utility
Midsize
Ezecutive and luxuary
Source: Building World-class Automotive Supply, 2013
CAGR : 7%
Passenger Cars comprised of 17% of automobile export in FY15
4.5 4.4
5.1
5.6
6 6.2
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Passenger Cars Export Trend (in lakh
units)
CAGR : 6.6%
Passenger car production is expected to increase to 10 million in FY20
from 3.2 million in FY15
Economic and fuel efficient compact cars constitutes the
biggest segment in the Indian car market
India (in 2013)
GDP/Capita $
1,499
Car/1000 People 15
Two Wheeler/1000
People
96
Total Motor
Vehicle/1000 People
132
The Indian automobile market is highly under-penetrated as compared to other
countries in the exhibit, showing potential for the domestic market to grow.
GDP per capita has grown from USD 1432.25 in 2010 to USD 1498.87 in 2013
and is expected to reach USD 1869.34 by 2018

15. FDI in automobile sector has grown at a high rate of 38%
CAGR between 2011–15
69.4%
16.7%
11.1%
2.8%
Export Share FY15
2 Wheelers
Passenger
Vehicles
3 Wheelers
Commercial
Vehicles
Source: IBEF
1.8
2.3
2.93 2.89
3.1
3.5
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Passenger Vehicles Commercial Vehicles Three Wheelers
Two Wheelers Grand Total
Source: SIAM
Export Trend (million units)
CAGR : 14%
India is emerging as export oriented manufacturing destination for global OEMs
5.5
1.4
2.1
2.2
Jan 2000 - Dec 2012 Jan 2013 - Jun 2015
FDI in Automobile Industry (in bn USD)
Total – 5.7
2013
2014
2015
Source: DIPP

16. India is an emerging global hub for sourcing auto components
Engine Parts,
31%
Drive
Transmission &
Steering Parts,
19%
Body &
Chassis, 12%
Suspension &
Breaking Parts,
12%
Equipments,
10%
Electrical Parts,
9%
Others,
7%
Segment wise production of auto
components
Indian auto component industry turnover is expected to cross USD 100
billion mark by 2020
Source: ACMA
21.3
29.0
31.5
33.2 32.6
36.1
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Turnover of Auto Components
Industry (in bn USD)
CAGR : 11%
 There are more than 6000 players in the market generating
a turnover of USD 36.1 bn in FY15
 The auto component industry caters three broad categories
of the market
 Original Equipment Manufacturers (OEM)
 Replacement Market
 Exports market comprising primarily of international
Tier I suppliers

17. CAGR : 18%
CAGR : 29%
Source: ACMA
Africa
7%
Latin
America
and the
Caribbean
7%
North
America
23%
Asia
25%
Europe
37%
Oceania
1%
Export Destination
Africa
1%
Latin America
and the
Caribbean
1%
North
America
7%
Asia
58%
Europe
33%
Oceania
0%
Import Origin
Export Import
USA China
Germany Germany
UK Japan
Top export destinations & import origins
Top 3 countries account for 36% of exports and 50% of imports
Indian auto components industry is expanding it’s footprint in the
global market, evident by sharp growth in exports
Export & Import trend (in bn USD)
5.5
7.6
10.3
11.4 11.9
12.8
2.9
4.7
6.6
8.1
9.4
10.5
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Imports Exports

18. Karnataka is home to top global and national automobile
and auto component manufacturers
• Honda Motorcycles & Scooters set up an plant in Narasapura which began operation in 2013.
• HMSI has witnessed a fast growth from 2012-13 to 2013-14. Domestic sales increased at 34%
and exports increased at 20.9%.
• HMSI will additionally invest approximately INR 5.8 billion and build a new production line
within the existing plant site.
• Toyota Kirloskar is a joint venture between Kirloskar group and Toyota Motor Corporation.
• The company has manufacturing facilities at Bidadi.
• The company has a market share of more than 5% in passenger vehicle segment.
• Volvo India has a state-of-the-art bus manufacturing unit near Bengaluru.
• The company has increased its capacity to around 1,500-1,700 buses per annum in 2013-14
from 1,100 buses per annum earlier.
• Volvo India plans to invest US$ 115.6 billion to set up a truck and bus manufacturing facility in
Malur, Kolar.
• TVS Motor Company is one of the largest two-wheeler manufacturers in India. The company is
the flagship company of the TVS Group. TVS Motor has four manufacturing plants across
India including Mysore.
• The company achieved a turnover of USD 1.6 billion in 2014-15.
• Delphi India was incorporated in 1995 as a wholly owned subsidiary of Delphi. The company is
a leading global supplier of electronics and technologies for automotive, commercial vehicles
and other market segments.
• Delphi India has a technical centre in Bengaluru, which is the largest technical centre outside
the US.

19. Karnataka’s automobile output has doubled in 4 years,
registering a 36.5% CAGR
4th largest state in automotive
production with output of USD 2.8
bn, contributing 8.5% to national
automobile industry output
Investments of around 700 mn
USD generating annual revenues
of 600 mn USD
The automotive industry provides
employment to more than 55,000
workers
1.1
2.8
2009 -10 2012 - 13
Karnataka Automobile Output (in bn USD)
CAGR : 36.5 %

20. 1
24
9
34
5
6
7
8
9
10
1
2
5
3
6
7
8
10
12
Bangalore
13
1 Tata Motors
2 TVS Motors
3 Honda Motorcycles
and Scooters India
4 Volvo Buses India Pvt
Ltd
5 TAFE Tractors
6 Toyota Kirloskar Motor
Pvt Ltd
7 Mahindra Reva
8 Scania
9 General Motors
Technical Center*
10 Mercedes Benz*
1 Denso
2 Bill Forge Pvt Ltd
3 Autoliv
4 Falken
5 Bosch
6 Exedy
7 Aisin
8 Continental
9 JK Tyres
10 Delphi
11 Denso
12 Indo Schöttle
13 Aequs
OEMs
Auto Component
Manufacturers

21. Karnataka’s auto component industry has the potential for
growth in local, national and international markets
• Over 50 automobile component manufacturers in the
state with a turnover of more than USD 1.5 billion in
2014 – 2015.
• Karnataka accounts for more than 6% of country’s auto
component output
• Tier I & Tier II manufacturers form about 80% of output
and employment of the industry
1.07
1.55
1.77 1.83
2009 -10 2010 - 11 2011 - 12 2012 - 13
Karnataka Auto Component Industry Output
(in bn USD)
CAGR : 18%
Presence of robust domestic customer
base with more than 14 million registered
vehicles in the state.
Proximity to the west (Maharashtra & Gujarat)
and south (Karnataka, Tamil Nadu and Andhra
Pradesh) auto clusters in the country.
Growth enablers in Karnataka:
Major Manufacturers

22. Localization of the OEMs in the state
Manufacturer Localisation
Honda Motorcycles & Scooters India 70%
Toyota Kirloskar Motor Private Limited 48%
Tata Motors ~70%
Volvo Buses India Pvt Ltd. (Awaiting data)
Scania Trucks 18%
Buses 100% localised bodies
• The OEMs in Karnataka are fairly localised, showcasing the availability of technical
skillset in the state.
• OEMs are likely to increase localisation to reduce manufacturing cost and stay
competitive, which in turn shall create potential for component manufacturers to
grow.

23. Karnataka’s Unique
Advantage

24. Karnataka has the right ecosystem for the automotive sector
to grow in the state
Presence of the leading automotive players
• The leading OEM, Tier I & II companies located in Karnataka, forming the entire value chain.
• Auto clusters are located at Hoskote in Bengaluru Rural, Bidadi in Ramanagar and at Dharwad.
• Industrial valve cluster is located at Hubballi – Dharwad.
• Auto components clusters in Shivamogga and Belagavi
Connectivity to both eastern and western ports
• Connectivity to 6 ports via NH and SH to facilitate growing exports in the sector.
• Planned Dedicated Freight Corridor between Chennai and Bangalore will further improve
connectivity to Chennai and Ennore ports.
• ICD is easily accessible in Bangalore.
Skilled Workforce
• Highly skilled workforce available in the state owing to more that 1400 ITIs.
• More than 350 R&D centres and 200 engineering colleges driving innovation in the state.

25. Locational Advantage
Bangalore has 2nd
highest number of
cars among all
cities in India
with more than
4.1 million
registered cars
Karnataka has
connectivity to 4 out
of top 5 automobile
markets in the
country.
Maharashtra, Tamil Nadu,
Gujarat & Andhra Pradesh
Karnataka has 2 identified high priority
nodes in Chennai –Bangalore Industrial
Corridor and Bangalore – Mumbai
Economic Corridor. Development of these
nodes shall increase industry ready land
near the existing clusters
• CBIC – Tumakuru
• BMEC – Dharwad
Chennai
EnnoreNew
Mangalore
JNPT
Mumbai
Krishnapatnam
Approximate distance between automobile clusters in
Karnataka and major ports nearby
Legend
1 Bangalore (Urban &
Rural)
2 Mysuru
3 Dharwad & Belagavi

26. Government policy enablers

27. Automotive has been identified as a focus sector in Industry
Policy 2014 – 2019 of Karnataka
• To incentivize and institutionalize the R&D environment for auto sector in the State
• Fostering and supporting linkages between industry and academia for research.
• Propose to commission the 'Karnataka Automobile Research & Innovation Centre' in
Karnataka which would also be an incubation centre. The centre is proposed to be
established on a PPP model with State support.
• To set up an industry group to study and recommend measures for growth of the auto
component sector in the State.
• With a view to reduce air pollution and encourage manufacture of green Hybrid and
Electrical Vehicles it is proposed to reduce road tax, registration tax as indirect
incentives.
• Automotive Sector industries declared as public utilities under Industrial disputes Act
1947 during the policy period.
Initiatives for Automotive sector proposed in Karnataka Industry Policy 2014-2019

28. Wide range of incentives are provided for large scale projects
as well as MSMEs
MSME
• Infrastructure Support
• Financial
• Technology Upgradation & Technical
Support
• Marketing Support
• Procedural Reforms
• Value Chain Cluster Development
• Various Incentives and Concessions with
extent based on size & location of the
investment
• Investment promotion subsidy
• Exemption from stamp duty
• Reimbursement of Land Conversion
Fee, etc.
Large, Mega, Ultra
& Super Mega
Enterprises
• The quantum of investment based on the
location of the proposed investment
• Exemption from Stamp Duty
• Concessional Registration Charges
• Reimbursement of Land Conversion Fee
• Exemption from Entry Tax
• Subsidy for setting up ETPs
• Interest free loans on Net VAT and CST

29. GoI also provides policy support and it has envisioned India
to be a manufacturing and R&D hub for automobile sector
FDI Policy
• Automatic approval for foreign equity investment up to 100% with no minimum investment
criteria
AUTOMOTIVE MISSION PLAN, 2006-16
• The AMP targets exports worth USD 40–45 bn in 2016, including component exports worth
USD 20–25 bn and outsourced engineering services worth USD 2–2.5 bn.
• The AMP targets a total turnover of USD 145 bn by 2016.
• Automotive Mission Plan, 2016-2026 has been revealed with new projections and targets.
National Automotive Testing and R&D Infrastructure Project (NATRiP)
• A unique initiative between the Government of India, a number of State Governments and
Indian Automotive Industry to create a state of the art Testing, Validation and R&D
infrastructure in the country.
• Aims at setting up of seven state-of-the-art automotive testing and R&D centres across the
country

30. Investment opportunities

31. Investment Opportunities
Passenger Vehicles,
Passenger Cars, Utility
Vehicles, Multi Purpose
Vehicles
Two wheelers –
Scooters, Mopeds and
Motorcycles
Three wheelers –
Passenger and Goods
Carriers
Commercial Vehicles –
Light, Medium and
Heavy Commercial
Vehicles
The state is keen to develop Free Trade
Warehousing Zone (FTWZ) through PPP mode
Auto Components and
Accessories
Manufacturing
R&D and Testing
Facilities for automobile
industry
'Karnataka Automobile Research & Innovation
Centre’ on PPP mode

32. Karnataka is home to sector related clusters creating an
congenial ecosystem for investors
Automobile
Industrial Valve
Auto Components
Bangalore
Location Available Industrial
Area (in acres)
NIMZ, Vasanthanarasapura 9,000
BMEC Dharwad Node 5,000
CBIC Tumkur Node 10,000
Bengaluru Rural
Belagavi
Shivamogga
Existing clusters in the state