A group of automotive manufacturers has warned that India needs to urgently improve its infrastructure and reform its tax, land acquisition and labour laws if it is to become an international automotive manufacturing hub.

At the annual meeting of the country’s biggest vehicle industry group, automotive executives said that India must create a better business climate quickly or risk losing out to emerging market rivals like China.

Speaking at the Society of Indian Automobile Manufacturers, GM International president Stefan Jacoby said: “India has an opportunity to build a globally competitive automotive industry, but the sector needs a clear road-map in order to realise its full potential.

"The country needs to streamline taxes that vary from state to state, ease rigid hire-and-fire laws and set internationally harmonised fuel-emission, safety and other standards. It must also modernise its creaking infrastructure and ease bureaucratic ‘red tape’.”

Meanwhile, Takashi Hata, senior vice-president of Nissan Motor Co, said: “Logistics and infrastructure are a clear disadvantage of the country. There is an urgent need to improve the general infrastructure — from the roads, harbours and railways to electric power and the water supply.”

The annual meeting also heard that just 1.7% of India’s population owns a car, compared with 80% of the US population.