Auto firms ready large-scale capacity expansion

Tata Motors has announced one of the most aggressive capex roadmaps of Rs 33,000–35,000 crore in its passenger vehicle business between FY26-FY30. This will include Rs 16,000–18,000 crore for the electric vehicle portfolio. A new facility at Ranipet in Tamil Nadu, with eventual capacity of 2.5–3 lakh units, will support EV production and deeper localisation of Jaguar Land Rover models.

Maruti Suzuki has formalised a Rs 35,000 crore investment agreement with the Gujarat government for a greenfield plant at Khoraj, with capacity of up to 1 million units by FY29. It also plans to expand its Hansalpur and Kharkhoda facilities. 

Mahindra & Mahindra has committed a Rs 15,000 crore investment over the next decade to set up its largest integrated automobile and tractor manufacturing facility near Nagpur, with production scheduled from 2028. From a current capacity of about 8.2 lakh units, Mahindra expects to cross 10 lakh units within two years, aided by debottlenecking at Chakan and Nashik to unlock additional monthly volumes.

Others like Hyundai Motor and Toyota Kirloskar Motor are also ramping up their capacities. Hyundai’s plans include reaching 2.5 lakh units in its Talegaon plant by 2028, pushing the total capacity in India beyond the 1 million-unit mark while Toyota Kirloskar’s is activating its third plant at Bidadi, adding 1 lakh units annually at an investment of about Rs 3,300 crore. It has also signed an MoU for a greenfield facility at Chhatrapati Sambhajinagar in Maharashtra with proposed capacity of 4 lakh electric and hybrid vehicles at an estimated investment of around Rs 20,000 crore.

GST 2.0 Catalyst

Ravi Bhatia of Jato Dynamics, provider to data and analytics to the automotive industry,  said the post-GST surge reflects structurally stronger demand rather than a short-term spike. Record volumes, he noted, are reinforcing boardroom confidence to invest across ICE, hybrid and EV platforms.

V G Ramakrishnan, managing director at Avanteum Advisors, added that India is poised to emerge as a cost-efficient export hub amid rising Chinese competition in Europe. “The capacity build-out signals that India’s automakers are preparing not just for cyclical demand, but for sustained domestic growth and a larger export role,” he said.

Scaling for the World

Industry analysts believe that improving capacity utilisation and steady export growth are further strengthening the case for expansion. Exports rose nearly 15% in FY25, and easing tariff uncertainties in markets such as the UK, EU and US could add fresh momentum, as India is being increasingly being positioned as a competitive alternative manufacturing base amid shifting global production strategies.

The investment wave is cascading down the value chain as well. Vinnie Mehta, director general of the Automotive Component Manufacturers Association (ACMA), said suppliers are reinforcing capacity in tandem with vehicle makers, reflecting confidence in India’s trajectory as a global hub. Companies such as Uno Minda have lined up expansion projects worth over Rs 3,000 crore spanning new plants and advanced production facilities, according to Sunil Bohra, CFO, Uno Minda. 

The industry received a huge fillip following the GST rate rationalisation in September 2025. However, what initially looked like a tax-led spike is now being interpreted in boardrooms as the start of a structural upcycle.

The industry ended calendar 2025 at a record 26.8 million vehicle sales, up about 5% year-on-year. Passenger vehicles contributed 44.9 lakh units, while exports jumped 16% to 8.63 lakh units, reinforcing India’s growing role in global supply chains. The momentum has continued into 2026. According to the Federation of Automobile Dealers Associations (FADA), retail sales in January rose 17.61% year-on-year to 2.72 million units, with dealers pointing to strong enquiries, wedding-season demand and steady rural cash flows.

As a result, the industry is merely looking at servicing current order books, it is also positioning itself for a long term capacity addition cycle to cater domestic as well as global buyers.