When we talk about India, the numbers are always very high, the population continues to grow and is very young, the economy is one of the most promising in the world and the opportunities for companies that can keep up with the numbers and the needs of the country are also increasing.
It is undeniable that the country still has many gaps in basic services and the Corona pandemic not only exposed these needs but also brought some more.
A few Indian transport-related figures give us a glimpse of the market potential and the opportunities that the country can offer:
Roads & Highways: India has the second-largest road network in the world.
Railways: India has the world’s largest railway network in terms of passenger traffic.
India has the fourth largest railway system in the world, behind only the US, Russia and China.
India’s railway network has 123,542 km of total track on a route of 67,415 km and about 7,300 stations. The railways operate close to 13,000 passenger trains carrying over 23 million passengers daily.
Indian Railways carried over 109.68MT of freight in November 2020.
Indian Railways is the largest employer in India and the eighth largest in the world; it employs about 1.4 million people.
Ports and Shipping: Shipping in India moves 95% of trade by volume.
The centre of global maritime trade is expected to shift from the Pacific to the Indian Ocean region. India and China will be the world’s largest manufacturing centres by 2030 (Source: Lloyd’s Register Marine & University of Strathclyde, Glasgow).
Sectors like Power (24%), Highways (18%), Urban (17%) and Railways (12%) total about 71% of the projected infrastructure investments in India.
Most developing countries are facing problems related to traffic and transportation, nevertheless, the growth in the Indian network of transport and the demand for transport services in the last 50 years has been quite significant.
Currently, about 800 billion ton/km of freight and 2300 billion passenger/km are being handled by the Indian transport system, with the total transport demand growing at around 10 % a year in the last 10 years.
The modal growth rates have varied with road transport and air services growing at a much higher rate than the railways.
However, with such a potential transport market, comes challenges that already exist in India. The main problems of transport development in India consist of faulty planning of transport systems, lack of railroad coordination, worn out and obsolete assets.
Generally, since 1951, the development in the Indian transport sector is quite good but there are many hurdles in the path of progress. Improved technology – is the key element enhancing the situation towards technologically advanced and sustainable transport systems, which is modern and uses the latest technology.
The EU India Innocenter has specific and free programmes to support European companies in their internationalisation plans and their entry into the Indian market.
India has some needs that have already been solved by European innovations and its market is with open arms to receive these companies, including the support and recognition of the government.
Despite the above numbers, today the mobility industry is undergoing a fundamental transformation from private transport as the only means of mobility to a shared, more door-to-door and integrated approach.
This new consecutively growing mobility market is expected to touch $90 billion by 2030. Taxi cluster revenue in India is expected to exceed $61 billion to date, transport revenue is expected to reach US$ 43.3 billion by 2025.
Several economic and technological trends could help achieve this goal. Rapid urbanization means that India will have more than 500 million people living in cities by 2030 – almost double the current US population. Rising incomes will also play a role, as around 60 million households will be able to enter the consumer class by 2025, and more people will join the workforce increasing the demand for mobility.
India’s electric vehicle industry is far behind, with less than 1% of total vehicle sales. Currently, Indian roads are dominated by conventional vehicles and have approximately 0.4 million two-wheel electric vehicles and a few thousand electric cars only.
Given the climate change commitments made by the Indian Government to reduce emissions intensity by 33-35% by 2030 from 2005 levels, it is pertinent to introduce alternative means in the transport sector that can be along with India’s rapid economic growth, rising urbanization, travel demand and the country’s energy security.
Electric mobility presents a viable alternative to meeting these challenges when packed with innovative pricing solutions, appropriate technology and supporting infrastructure and therefore has been on the radar of the Government of India.
The report developed last year by CII-Deloitte on The Future of Mobility in India presents some of the key trends and factors that should influence the future of this sector in the country.
The global automotive industry is experiencing significant disruptions across the value chain. One of them, which is expected to have a significant effect on stakeholders across the mobility ecosystem is powertrain electrification.
In India, demand for mobility is likely to grow at a faster pace than ever, in the next decade, driven by urbanisation, growing workforce, rising income levels and investments to improve infrastructure.
If this growth continues to depend on gasoline and diesel internal combustion engines (ICEs), it could significantly affect the economy (82% of India’s oil need is met by imports; the automotive sector contributes around 55% of total India’s oil consumption) and environment (India was the third-largest emitter of greenhouse gases in 2019 and today it has had 35 of the 50 most polluted cities in the world.
The need to grow the mobility ecosystem sustainably, both from an economic and environmental perspective, has led to powertrain electrification and the introduction of electric vehicles (EVs). EVs are much cleaner (67% fewer emissions) and are potentially much more economical (recent EV launches claim up to 80% lower operating costs). Indian consumers are increasingly aware of this benefit and show a strong preference for EV adoption.
For large-scale electrification to become a reality, the availability of adequate charging infrastructure is extremely important. The government’s involvement in this becomes a priority, to ensure its primary objective of driving a new era of sustainable growth while preserving the legacy and relevance of the Indian ecosystem.
One of the key emerging trends in the global automotive sector in the 21st century is vehicle connectivity. Software and data become increasingly important. The use of moves towards the scope of vehicle functionality and health as monitoring of its occupants including stress levels, heart rate, alcohol consumption and fatigue.
Shared mobility: Indian cities face one of the highest levels of congestion in the world. Bengaluru, with 71% congestion (additional time required to cover a given distance during peak hours), has the worst congestion in the world, followed by Mumbai (4th), Pune (5th) and Delhi (8th) according to the TomTom Traffic Index released in 2020.
One of the major factors is the preference for private vehicles, as public transport is considered inefficient and even unsafe. In response to high congestion, several models of shared mobility have emerged in the last three years. In addition to ride-sharing services, alternative sharing models such as car rental, car subscription, fleet management and combined mobility have also become popular.
The emergence of these models resulted in a change in consumer behavior. 56% of respondents in the Deloitte GACS 2020 said they were travelling more because of the available ride services. Car ownership also had an impact, with over 60% of respondents questioning the need to own a vehicle in the future. Interestingly, millennials are at the forefront of adopting these mobility solutions, given the reduced importance they attach to car ownership and its traditional association as a barometer of success.
Autonomous vehicles: Apart from congestion, the other main concern on Indian roads is the high rate of accidents and lives lost due to them.
Despite having 1% of the world’s cars, over 6% of the world’s accidents occurred in India during 2018, leading to over 11% fatalities globally. AVs have the potential to largely address India’s traffic safety issues.
However, the technology has not seen much traction in India due to fear of job losses, weak traffic infrastructure and low adherence to traffic rules (e.g., lane discipline, follow traffic lights, crossings) that act as major obstacles for smooth operations of AVs.
Customers also expressed mixed emotions regarding their perception of AVs. While they agree that the technology is beneficial for the ecosystem, they are unsure about several safety aspects associated with EVs. Unfavorable experiences from globally disseminated experiments and a low safety record have changed consumers’ confidence about AVs from existing technology companies.
Both the government and the private sector are making constant efforts and offer benefits and opportunities to improve and develop the mobility market in India
If you are a European startup with innovative mobility, logistics or other vertical solutions, India can be the perfect country for expanding your business.
The EU India Innocenter offers free programmes and support from discovering business opportunities to creating a strategic local network in India. Check our different programmes and count on us for all the steps of this journey.
