FDI in Indian Automobile Industry

By: EconomyWatch   Date: 30 April 2010

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The FDI or Foreign Direct Investment in Indian Automobile Industry has opened up new avenues for the development of this important sector of Indian industries. The liberalization of government policies regarding FDI in the automobile industry of India has increased the scope of this industry.

Initially, the automobile industry of India was ruled by national vehicle manufacturers like Premier Automobile and Hindustan Motors. The entrance of foreign automobile companies in the market was restricted by the imposition of high import tariffs and other policies and measures.

The first FDI player in the Indian automobile industry was Suzuki. In 1980s this company entered into a joint venture with Maruti Udyog, a state run enterprise. The then Indian government permitted this company to enter the Indian automobile market in 1983.

In 1991, the government of India liberalized its policies regarding the automobile industry of India Foreign Direct Investment in the automotive industry of India was permitted. In 1993, FDI was also allowed in the passenger car segment of Indian automobile industry.

The liberalization of governance policies with regard to FDI in Indian automobile industry has resulted in the rapid growth of this industrial sector post 1993. The major global players in the automobile industry have invested in the Indian vehicle manufacture as well as auto component part manufacture.

The major foreign players who have a significant role in the development of Indian automobile industry include the following:

  • Ford from USA
  • DaimlerChrysler AG from Germany
  • General Motors from USA
  • Suzuki from Japan
  • BMW from Germany
  • Honda from Japan
  • Renault from France
  • Hyundai from South Korea
  • Toyota from Japan

    Foreign Direct Investment in the automobile industry of India has helped in the growth of this sector in terms of production, domestic sales and export. FDI is also permitted in the manufacture of auto components in India.


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