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High prices of automobiles are likely to persist at elevated levels even during 2022, said Grant Thornton Bharat in a report.

Lately, increasing cost of commodities in India has resulted in record-high prices for new and used vehicles in the country.

"It is expected that these high prices are likely to remain as such in the next year as well and may not reinstate until 2023."

Besides, the report cited other challenges for the sector such as semiconductor crunch which has aggravated problems for auto manufacturers.

"As far as semiconductor shortage is concerned, domestic manufacturing has turned out to be a key solution.

"To rely on domestic manufacturing to fulfil semiconductor needs, the country may have to wait before chips are manufactured here. For now, the country's journey in the semiconductor sector is more likely to start with assembly, testing, marking, and packaging (ATMP) and specialty fabs."

Besides, in context to the efforts made by the government to become a self-reliant economy, the report pointed out that Indian automobile and manufacturing sector is expected to boost India's FDI for the current year on the back of production-linked incentive (PLI) scheme.

The scheme is designed to incentivise domestic manufacturing and thereby, aimed at increasing exports.

"Moreover, India being the sixth-largest economy in the world is characterised by an exponential consumer base, making it desirable to potential investors where India's cost base is a great advantage."

"With the help of all such factors, India can also become a centre for auto design and engineering services."