India in Global Auto Sector

The recent changes and developments in the global auto sector have made its impact on the Indian market and manufacturers too. India in global auto sector has made its presence felt in the recent years with its potential. India offers scope for the manufacture of low cost vehicles with its highly skilled but inexpensive manufacturing base, labor intensive components and developing economy.

The recent changes and developments in the global auto sector have made its impact on the Indian market and manufacturers too. India in global auto sector has made its presence felt in the recent years with its potential. India offers scope for the manufacture of low cost vehicles with its highly skilled but inexpensive manufacturing base, labor intensive components and developing economy.

The automobile industry in India is one of the pillars of the Indian economy. It has recorded sales of Rs 20,000 crore and involves investments of a whopping 11,500 crore by as many as 400 investors. It has also been instrumental in employing a huge work force, close to 2.5 lakh people.

In order to determine the position of India in the global auto sector, one needs to go back to the initial days of its growth. Before the policy of liberalization was introduced, the component manufacturers practically remained unscathed during the recession periods. The component and vehicle manufacturers shared an uncomplicated relationship. There were no significant investments in development of products or in research and development. The closed automobile market had a few big names and the development of the market was restricted by limited number of suppliers.

Liberalization of the economy in 1991 ushered in a brand new phase. The giants of the global auto industry entered the Indian market. This led to a rapid rise in the number of vehicle manufacturers. They not only brought in upgraded technology and new concepts but also offered the customers a wide range of products to choose from. There was something for every section of the customers. Some of the leading names in this industry include Mahindra & Mahindra, Swaraj Mazda Ltd, Bajaj Auto, Telco, Honda Motors, Toyota, Kinetic Engineering LML and Hindustan Motors.

With the delicensing of the automobile industry in 1993, some of the global automobile manufacturers set up their production units in India. The Indian automotive regulations are similar to the Economic Commission of Europe regulations. Consequentially, India has become a prominent place for the setting up of automobile manufacturing units. The global auto giants are making full use of the manufacturing base in India. For example, Hyundai Motors has transferred the manufacture of one of its compact models, Autos Prime, to its plant located in Chennai. It also plans to execute similar plans for its other product Getz. The production is expected to witness a surge in order to meet the export demand. The Ford Motor Co. also exports a sizable chunk (58%) of its total manufactured products from India. Suzuki Motor Corp has invested a lump sum of US$ 2 billion in India and is expected t export 200,000 cars within 2010 from India.

Tata Motors, one of the pioneers of the automobile industry in India, is anticipated to launch its US$2,500 car in the global market. It has already established its showrooms in various African cities. Its recent ventures include collaboration with the Italian automobile company Fiat. This collaboration is expected to give an impetus to its sales within the South American continent. Other global auto companies making their foray into India and setting up their manufacturing units in India include Toyota, Nissan Motor and Honda Motor.

India’s prospect in the global auto sector in the coming years is promising enough. The auto industry is witnessing a gradual shift from the western countries to countries in Asia. The big players in the Asian market include the ASEAN countries, People’s Republic of China and India. According to available records, in 2006, India sold 1 million vehicles. The chances for a flourishing market are high with the recent technological advancements, fragmentation of the market and globalization.