Automobile Industry of India

India has a huge automobile industry. The country ranks 4thin Asia and 9th in the world as the world’s largest automobile Industry. India has an annual production of approximately about 2.3 million units.

Presently, India is the world’s largest manufacturer of tractors, second-largest manufacturer of two-wheelers, and fifth-largest manufacturer of commercial vehicles.

The automobile industry in India gained momentum after the liberalization in 1991. The industry has continued to grow consistently and is increasingly becoming competent in the global market. In the recent past, India has seen an upsurge in the automobile industry thanks to its relaxed restriction on the investment policies in the sector. India’s overall economic growth has also played a significant role in attracting foreign investors in India to invest in the automobile sector of the country.

The automobile sector in India has displayed great advances in relation to the utilization of new technologies and being flexible in the wake of the changing business scenario.

Both the central government of India and its state governments have taken several measures to draw investments in the sector and further accelerate the growth of the industry in the country. The government has liberalized the norms for foreign investment in the sector. Presently the government permits 100% direct foreign investment in the sector.

The government has also undertaken several policy measures and incentives to boost investment in the automobile sector of India. The most prominent policy is Auto Policy, which was drawn in 2000. This policy basically aims to establish a globally competitive automobile industry in India and contribute to the Indian economy.

The important objectives of the Auto Policy are:

1. Making India a global source for auto components
2. Aiding the development of vehicles that can be driven by alternative energy sources
3. Developing domestic safety methods that are on par with international standards
4. Steering India’s software industry into the automobile technology
5. Making India an international hub for manufacturing small and cheap passenger cars
6. Being the global center for manufacturing two-wheelers
7. Ensuring a balanced transition to open trade at a minimal risk

Thus, this ambitious Auto Policy of India aims not only to make India grow in the sector but also attract huge investment in the country.

The Department of Heavy Industry, which falls under the Ministry of Heavy Industries and Public Enterprises, is the leading agency responsible for promoting the growth and development of the automobile industry in India.

The department assists the industry’s growth through policy initiatives, providing technological collaboration, upgrading, and R&D facilities to the automobile manufacturers.

Also, the growth of Indian middle class and their increased purchasing power supported by strong macro-economic fundamentals have been instrumental in attracting major auto manufacturers in India. Several global players, including leading automobile manufacturers Suzuki and Honda, have invested heavily in India and have managed to tap the Indian market.

All these factors and the initiatives of the government is an indication that the Indian automobile Industry has been emerging as a new sector that has unlimited potential for growth and has promise to offer valuable returns on investments. The automobile sector has not only been meeting the requirements of the domestic market but has been penetrating deep into the international market.

The government of India has taken several initiatives to attract foreign investments in India. Not only foreign establishments but also entrepreneurs from India can reap the benefits of the growing Indian Market.

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