The Indian automotive industry has come a long way and is considered as one of the most mature and competitive industries in the world. The surge in the disposable incomes and a resilient economy has created huge market for both commercial and passenger vehicles. India is the 9th largest manufacturer of motor vehicles and cars in the world. However, the surge in the automobile market has made India more reliant on oil than ever before. Currently, India is the 5th largest oil importer in the world.
With all global automobile giants set to foray into India to meet the ever-increasing demand for personal vehicles, its oil dependency will rise further in the coming years. For the past 25 years, India's domestic production of oil has remained the same, while its expenditure on petroleum products has grown manifold. India imports almost 70% of its oil, which is having a major impact on its balance-of-payments position.According to the data released by the Petroleum Ministry, India imported 110.85 million tons of crude oil in 2006-07, which is almost 11.5% higher than the 99.4 million tons bought in 2005-06. Even if the recent series of domestic oil exploration discoveries are totally exploited, India will find it hard to keep its imports down at existing levels, as domestic demand for petroleum products is growing persistently at more than 5% per year.
Industry estimates predict that India's import dependency will increase from the current 70% of consumption to about 85% in the next 15 years. With oil prices not likely to come down in the near future, it is very difficult to maintain a decent oil stock and this could affect the growth and trade balance of the Indian economy negatively. The International Energy Agency, in its World Energy Outlook 2007, mentioned that if existing policies continue, India will become the third biggest emitter of Greenhouse Gases (GHG) by 2015. The transport sector in India is mainly responsible for air pollution, which causes a wide range of health problems. According to a WHO study, more than 527,000 of deaths were reported in India in 2007 due to air pollution.
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