India’s automotive industry is booming. The industry currently contributes about U.S. $34 billion to the Indian economy, equivalent to five percent of its national GDP. It produces over 11 million vehicles a year making it one of the eleventh largest passenger car producers in the world. Directly and indirectly it employs more than nine million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. India is the world’s second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles in the world.
In the initial years after independence Indian automobile industry was plagued by unfavorable government policies. All it had to offer in the passenger car segment was a 1940s Morris model called the Ambassador and a 1960s Suzuki-derived model called the Maruti 800. The automobile sector in India underwent a metamorphosis as a result of the liberalization policies initiated in the 1991. Measures such as relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports played a vital role in turning around the Indian automobile industry. Until the mid 1990s, the Indian auto sector consisted of just a handful of local companies. However, after the sector opened to foreign direct investment in 1996, global majors moved in. Automobile industry in India also received an unintended boost from stringent government auto emission regulations over the past few years. This ensured that vehicles produced in India conformed to the standards of the developed world .Today 100% of FDI is permissible in passenger car segment which is vital for us to consider investment in India
Growing home market
Growing mainly off burgeoning domestic demand, the industry has been expanding at around 16 percent annually over the past five years.
It is expected that the Indian automotive industry could emulate the Indian IT sector, which has...