Toyota, Honda, and Suzuki are investing billions of dollars in India, signaling the country’s growing importance as a global automotive manufacturing hub. As Japanese automakers seek to reduce their reliance on China, India’s lower costs, large labor pool, and restricted access for Chinese electric vehicle (EV) makers make it an attractive alternative. Toyota and Suzuki have together pledged about US$11 billion to expand production and export capacity. Meanwhile Honda plans to make India a base for one of its upcoming EV models.
Japanese carmakers are also benefiting from improved manufacturing quality in India and favorable policies under Prime Minister Narendra Modi’s government. With profit margins shrinking in China and competition from Chinese EV makers intensifying, India presents a more stable and strategic market.
Toyota goes local in India
Japanese investment in India’s transport sector surged more than sevenfold between 2021 and 2024, reaching 294 billion yen. On the other hand, investment in China’s sector dropped 83 per cent over the same period. Toyota is collaborating with Indian suppliers to localize production, reduce costs, and address hybrid component shortages amid rising demand.
The company plans to launch 15 new or refreshed models in India by the end of the decade and expand its rural network. The objective targets 10 per cent of the passenger car market, up from 8 per cent today. It has committed over US$3 billion to expand existing production in southern India and build a new plant in Maharashtra. The project is expected to bring a total capacity to over one million vehicles annually by 2030. Toyota President Koji Sato emphasized India’s growing importance to the company’s global strategy, particularly as North American profits face pressure from tariffs.
Help from Modi government
India’s economy has grown an average of 8 per cent over the past three years, driven by Modi’s efforts to attract foreign manufacturers. The government offers incentives for production aimed at both domestic and export markets. Yet it has put restrictions on Chinese investment, which provides Japanese automakers with a competitive edge.
In the last fiscal year, India produced five million passenger cars, exporting about 800,000. Domestic sales rose 2 per cent and exports 15 per cent. Analysts note that India’s protectionist stance benefits Japanese firms, enhancing their cost competitiveness against local brands.
However, competition remains tough. Domestic players like Tata Motors and Mahindra & Mahindra are expanding aggressively, eroding Suzuki’s long-held dominance. Despite past struggles by foreign automakers such as Ford and General Motors, Japan’s leading carmakers view India as a cornerstone for future growth and a vital counterbalance to their declining prospects in China.
Honda wants to go four wheels in India
For Honda, India is the biggest market for the two-wheel business. But Honda’s chief executive Toshiro Mibe intends to ramp up its four-wheel business. This puts India as a focus market next to Japan and the US.
They intend to use India for the production and export of their Zero Series Electric cars. Therefore, Suzuki’s US$8 billion investment in India is to mainly expand its local production capacity to four million cars a year.
Reference
The Straits Times. (2025, November 5). Toyota, Honda turn India into car production hub in pivot away from China. The Straits Times. https://www.straitstimes.com/asia/east-asia/toyota-honda-turn-india-into-car-production-hub-in-pivot-away-from-china