India will become the third largest market in the world after China and the US for light vehicles, including passenger cars and light commercial vehicles (LCVs), by 2020, according to a market research firm.

The country, however, will have to improve its infrastructure, as well as resolve component supply chain issues, in order to realise its huge potential.

"Our forecast is that by 2020, India will become the third biggest market for light vehicles, that includes passenger cars and LCVs, with total sales of nearly 12 million units," a top executive from the firm told a media source.

In a report, entitled 'India Automotive 2020: The Next Giant from Asia', the firm said India would have jumped from sixth place at present to be slotted after China and the US by 2020, with total sales of 11.9 million light vehicles.

In 2010, 2.7 million light vehicles were sold in India, up from just 700,000 light vehicles in 2000, it added. By 2020, China's light vehicles market is expected to reach 35 million units, while that of the US will rise to 17.4 million units, the report said. "There is a huge potential in the Indian market, but the key challenges lie in infrastructure growth to support the automotive industry," said the firm.

Also, the auto component supply chain in the country needs to scale up, not only in terms of volume, but also quality, to match global standards and become integrated with original equipment manufacturers, it added.

The report pointed out that with the average income of Indians expected to be moderate even in 2020, "vehicle demand will still be focused in the lower-end passenger vehicles segment as well as in the SUV and MPV segments" Given India's limited road infrastructure, vehicle pricing ceiling and concerns about fuel consumption, it would not be unexpected that micro van and mini truck models in the LCV (segment) will become more popular."

As per the report, of the projected light vehicle sales of 11.9 million units in India by 2020, passenger cars will account for 9.28 million units and light trucks another 2.69 million units.