Carmakers line up Rs 1 lakh crore expansion plan as GST tailwinds drive 65% capacity surge
India’s automobile industry is entering a decisive expansion phase, with carmakers collectively lining up investments of nearly Rs 1 lakh crore over the next 5-6 years. The capacity build-up comes on the back of GST (goods and services tax) rationalisation, which, industry leaders say, has provided the policy clarity and demand visibility required for long-term production planning.
From a current production capacity of around 5.5 million passenger vehicles annually, Indian carmakers are preparing to scale up to nearly 9 million units per annum — a 65 percent increase, or an additional 3.5 million units.
Industry executives believe the GST-driven momentum will not be short-lived. “The GST boost is not just for one month or one quarter. This is going to help keep the demand momentum up for the upcoming years,” said C S Vigneshwar, President of the Federation of Automobile Dealers Association, on February 10.
Maruti Suzuki to add 1.5 million units by FY30
Market leader Maruti Suzuki India is leading the expansion wave as it works to defend its market share, which has faced pressure in recent quarters.
The company plans to add 1.5 million units of annual capacity between FY27 and FY30 — more than half of its current total output. Maruti’s present installed capacity stands at 2.6 million units per annum.
A significant portion of the expansion will come from a new greenfield plant in Gandhinagar, Gujarat, with a planned capacity of 1 million units annually. The project will involve an investment of approximately Rs 35,000 crore.
The aggressive capacity build-up underscores Maruti’s intent to strengthen its position amid rising competition.
Toyota Kirloskar Motor targets 1 million capacity
Bengaluru-based Toyota Kirloskar Motor is also embarking on a major expansion as it plans to enter the league of India’s top three carmakers.
Toyota is understood to be doubling its capacity in India, targeting 1 million units per annum. In addition to a 100,000-unit expansion at its Bidadi plant in Karnataka, the company is planning a significantly larger facility at Chhatrapati Sambhajinagar in Maharashtra.
The upcoming plant will support export ambitions, leveraging proximity to the Mumbai port.
Some of Toyota’s key models — including the Toyota Fortuner and the Toyota Innova — are currently witnessing waiting periods, reflecting strong demand. The additional capacity will help reduce delivery timelines while accommodating new product launches.
