As the world moves towards net-zero emissions, a transition is expected across all economic sectors. Currently, about 65–80% of a vehicle’s emissions come from its use phase, and electrification is a major step toward reducing these emissions. However, to reach net zero, it is also important to address emissions from vehicle manufacturing and the upstream supply chain. Many leading auto companies in India and globally are already setting targets under the Science Based Targets initiative (SBTi) to reduce Scope 1, 2, and 3 emissions. It is therefore important to understand the future pattern of vehicle production, associated energy use, and emissions, as well as the demand growth for materials like steel and rubber. Our assessment uses CEEW’s adapted GCAM model to examine the potential implications if India’s automobile sector aims to achieve net-zero by 2050, ahead of the national goal of 2070.

Upstream Scope 3 accounts for over 83% of vehicle manufacturing emissions in India, with steel being a major contributor due to its reliance on coal-based processes. Vehicle production is projected to increase nearly 3.7 times by 2050, raising energy demand and material consumption. Under the net-zero scenario, OEMs and component manufacturers continue to rely on electricity, while steel suppliers transition significantly, with hydrogen accounting for nearly 56% of their energy mix. Consequently, steel procurement costs for OEMs could be 33–34% higher than under business-as-usual, and using near-zero-carbon steel in vehicles could increase vehicle costs by 2–5%. To achieve net zero, the auto sector must address both direct emissions (Scope 1) and indirect emissions (Scope 2 and 3), as these are much higher than Scope 1. If India’s automobile sector leads in cutting supply chain emissions, it will not only meet net-zero goals but also create the demand signal to decarbonise the broader industrial base, powering a cleaner economy.

Chetna, A.,  Chaturvedi, V. and Das, P., 2025. How can India’s Automobile Manufacturing Sector Go Net Zero? Exploring Decarbonisation Pathways. New Delhi: Council on Energy, Environment, and Water.

New Delhi: Council on Energy, Environment, and Water.