Automobile industry in India: resource consumption & efficiency opportunities

In the coming years factors such as growing population, rising aspirations of a growing middle class, increased per-capita income, access to affordable finance etc. will make the automobile sector all the more relevant for the Indian economy, says the authors - Mr Souvik Bhattacharjya and Dr Shilpi Kapur, Fellows, Green Growth and Resource Efficiency Division; Mr Prahlad Tewari, Fellow and Mr Ganesh Chandra Mouli, Research Associate, Energy Environment Technology Development Division; and Dr Suneel Pandey, Director, Green Growth and Resource Efficiency Division, TERI.


India's automobile sector has emerged as a key sector for the economy. Over the last 15 years, the sector has experienced phenomenal growth and in the coming years factors such as growing population, rising aspirations of a growing middle class, increased per-capita income, access to affordable finance etc. will make the sector all the more relevant for the Indian economy.

Resource Consumption and Efficiency Opportunities:

Automobiles require a very wide variety of raw materials for their production, including iron, which is made into steel. Most automobiles today are composed of 57 per cent steel, 7 per cent iron, 8 per cent plastic, and 8 per cent aluminum. Other materials account for the remaining 20 per cent. First, raw materials are mined or otherwise extracted from the earth. Then, a raw material production company turns the raw materials into materials that auto manufacturers can use in the production of automobiles. Those materials are, in turn, sold either directly to auto manufacturers or to auto parts suppliers.

In the past, automobiles have been composed primarily of iron and steel. Steel has remained a major automotive component because of its structural integrity and ability to maintain dimensional geometry throughout the manufacturing process. In response to increasing demands for more fuel efficient cars, the past ten years have seen changes in the composition of materials used in automobiles. Iron and steel use has steadily decreased, while the use of plastics and aluminum has steadily increased. Aluminum and plastics are valuable car components not only because of their lighter weight, but also their inherent corrosion resistance. Different processes are employed for the production of metal components versus the production of plastic components. Most processes, however, typically include casting, forging, moulding, extrusion, stamping, and welding.

In the presence of dwindling resource availability as well as related environmental and climate change related challenges, there is not only an urgent need for increased awareness among stakeholders but also a need for a model that would help in resource use sustainability in the sector. In a world of increased competition, resource efficiency has emerged as the central lever for sustainable value creation in the auto industry. In the last few decades, although efforts have been made to reduce the environmental/ecological impacts of the auto industry through process and technological innovations, technology transfers, domestic as well as collaborative R&D activities which have opened avenues for material substitution, better vehicular design that are resource efficient, adoption of cleaner fuels, etc., yet preliminary investigation reveals enormous scope for achieving higher efficiency levels. While, it is commonly said that market forces will drive resource efficiency in the auto-industry, yet, it is extremely important that a conducive policy environment is developed through informed decision making by the policymakers.