Why South Africa’s love for Indian cars is crucial to economic growth

India’s manufacturing sector depends heavily on the auto industry, and South Africa plays a crucial role in boosting it as it is the largest importer of Indian cars. In the financial year 2022-23, cars worth US$ 1.54 billion were sold to South Africa, which was 17.7 percent of the total vehicles India exported that year.

It is not that South Africa always played an essential role in India’s trade. In 2016-17, it accounted for only 7.5 percent of India’s overall car exports. However, its share has more than doubled in the past six years. Mexico, Saudi Arabia, Indonesia and the UAE follow South Africa on this list.

Besides car sales, India’s overall trade with South Africa has also doubled during this period. India exported goods worth $3.55 billion to the country in FY17, which rose to $8.47 billion in FY23, while imports from South Africa rose from $5.83 billion to $10.40 billion.

Petroleum products, cars, drugs & formulations, telecom instruments and dairy machinery are the top five exports from India. Coal, gold, precious stones, copper products and minerals comprise India’s top five imports from South Africa.

Meanwhile, the auto industry accounts for more than 35 percent of India’s manufacturing GDP and 7.1 percent of the national GDP, according to government data. Moreover, India aims to expand the auto industry size to Rs 15 lakh crore by the end of 2024, according to the Press Information Bureau.

In the context that countries across the world are looking for trusted partners and resilient supply chains, Union Minister of Commerce and Industry Piyush Goyal said last year, “I don't think there is a comparable opportunity of the size and scale of India anywhere else in the world”. He said that the automotive industry was at an inflection point and it was poised to grow significantly.