Maruti, Tata, Mahindra: How Automakers Are Scaling Capacity to Capture Global Demand?

Synopsis: Indian automakers are ramping up production to meet rising demand, with Maruti, Hyundai, Tata, and Mahindra expanding capacities to over 1 million units each. With 26.8 million vehicles sold in 2025 and exports up 16  percent to 8.63 lakh units, the industry aims to capture global opportunities, support EV growth, and strengthen India’s position as a manufacturing hub.

Indian automakers are stepping up efforts to expand production as they aim to meet the rising demand across domestic and global markets. Companies are investing in capacity growth and modernizing facilities to strengthen their presence and remain competitive in a rapidly evolving industry. This move reflects the sector’s broader ambition to capture emerging opportunities, respond to changing consumer preferences, and position themselves as key players on the global automotive stage.

Auto Industry

India’s automobile industry is entering a decisive growth phase, driven by strong domestic demand, rising exports, and a structural shift toward electric vehicles (EVs). With India already the world’s third-largest car market and exports at record highs, automakers are accelerating capacity expansion to avoid supply constraints over the next decade. This momentum is reinforced by policy developments such as India–EU free trade agreement (FTA) talks and a possible revamp of EV manufacturing incentives, positioning India as a long-term global manufacturing hub rather than just a consumption market.

India’s automobile industry finished 2025 with record yearly sales of about 26.8 million vehicles, up roughly 5  percent year‑on‑year, as strong demand across passenger vehicles, two‑wheelers, and three‑wheelers helped lift overall volumes to their highest ever. Passenger vehicles sold 44.9 lakh units and commercial vehicles 10.27 lakh units in 2025, and exports also climbed, with car exports rising 16  percent to 8.63 lakh units. 

What Each Major Player Is Doing

• Maruti Suzuki is anchoring its expansion around Gujarat, with a new greenfield passenger vehicle plant at Khoraj planned with capacity of up to 1 million units by FY29, expansion of Hansalpur from 750,000 to 1 million units, and scaling up Kharkhoda from 250,000 to 500,000 units. 
• Hyundai Motor India with current capacity of 8,24,000 units is expanding capacity through its Talegaon plant in Maharashtra, which has added 1,70,000 units and is scalable to 2,50,000 units by 2028, taking its total India capacity beyond 1 million units annually. 
• Tata Motors Passenger Vehicles currently operates with about 900,000 units of capacity across Pune and Sanand, scalable to 1 million, and is developing a new Ranipet plant in Tamil Nadu that could add up to 250,000 units over four to five years. 
• Mahindra & Mahindra, the second-largest carmaker, is expanding capacity at its Chakan plant by 240,000 units and upgrading production lines to support both EV and ICE platforms, with current capacity of 8,20,000 units, the total capacity expected to exceed 1 million units in the next two years.

Future Demand

Automakers are preparing for a multi-layered demand outlook. Domestically, rising incomes, improving road infrastructure, and higher vehicle penetration are expected to sustain growth. Internationally, exports are a key driver, with Indian-made vehicles increasingly accepted in emerging markets and selective developed markets. 

In addition, nearly 80 new model launches planned this decade, across ICE, hybrids, and EVs require assured capacity. EV demand, while still evolving, is expected to accelerate sharply toward the end of the decade, prompting manufacturers to future-proof plants today.

FTA Policy Push

The India–EU FTA discussions add a strategic dimension to these capacity plans. Expected tariff reductions on electric vehicles could boost bilateral trade and make India more competitive as an export base for Europe. Simultaneously, the government is reviewing the SPMEPCI scheme (Scheme to promote manufacturing of electric passenger cars in India), which so far relied mainly on import duty concessions and has seen zero participation.

A potential shift toward direct manufacturing-linked incentives could attract global EV makers to set up local plants instead of importing vehicles. If aligned with FTA benefits, this could significantly increase foreign investment in India’s EV ecosystem and raise capacity utilization across the industry.

Other Key Strategic Factors

Beyond capacity numbers, automakers are focusing on supply-chain resilience, localisation of components, and platform-sharing to control costs. Concerns such as uncertainty around FTA timelines, China’s restrictions on rare earth magnet exports, and high initial investment thresholds remain challenges, but they also reinforce the case for local manufacturing. Overall, the expansion wave reflects confidence that India will play a larger role in global auto and EV supply chains, making today’s capacity build-up a foundation for long-term industrial and export-led growth.

Indian automakers are scaling up production to meet growing demand at home and abroad, with new plants and expansions across major players like Maruti, Hyundai, Tata, and Mahindra. Capacity upgrades are designed to support both ICE and EV models, while supply‑chain localization and platform sharing help control costs. Policy developments like the India–EU FTA and potential EV incentives further boost the industry’s competitiveness. Overall, these efforts aim to position India as a major global automotive and EV manufacturing hub.

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