Discussion about impact on Indian

economy by Automobile sector.

(International trade perspective)

Presented by:
Kritika Arora
Prakash G
Prateek Kr. Sawhney

A PART OF: GROWTH PROSPECTS OF THURST AREAS OF

INDIAN EXPORTS
INTRODUCTION

The first commercial automobile ran on India’s road was in 1897,

which was imported directly from Germany.
By 1940, Indian automobile sector got a start up by Embryonic
Automotive industry. By1950 manufacturing of parts for
automobiles started.
The entry of foreign automobile industries after 1970’s gave the
complete shape for Indian automobile industry and a start up
for it’s growth.
The liberalization policy and weakening of license raj by the year
1991, allowed the automobile industries to promote their
operations in a large scale.
INDIA’S AUTOMOBILE SECTOR…
After 1991, the liberalization policy for foreign trade has
opened the door for foreign Automobile industries.
Initial entry was majorly by Imports and JVs with Indian
Auto tycoons Bajaj, Maruti, Tata, TVS, Ashok Leyland,
etc.,
By 1995, several automobile industries were set in India,
where parts were imported and assembled for sales in
Indian subcontinent .
Today around 70 major automobile manufacturers have their
ventures in India either on its own or JV or strategic
alliance with Indian companies or foreign companies.
More than 1043 major players are there contributing to
Indian automobile industry growth ad development.
FIGURES..
The automotive industry (including components & tyres)
has already attained a turnover of
Rs. 2, 20,600 crore.
The industry provides direct and indirect employment to
13.1 million people.
The contribution of the automotive industry to GDP has
risen from 2.77% in 1992-93 to 4.14% in 2008-09.
The industry is also making a contribution of 17% to the
kitty of indirect taxes of the Government.
In 2010 (April-August), overall automobile exports
registered a growth rate of 48.42 percent with industry
producing 7,063,063 vehicles.

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EXPORTS AND IMPORTS
After 1998, Indian automobile industry developed into a major
sector, assembling almost every car that was sold in Indian
subcontinent.
Imports were reduced by 15 times and exports were promoted,
compared to the number of automotives traded previously.
More than 44 varieties of automobile are manufactured which
constitutes the 59 different automobile sales such as Motor
cycles, Cars, SUVs, Lorry, Bus etc.,
Around 84 major ancillaries for the automobile industry is being
imported for assembling and sales purpose in India.
6% of Indian automobiles on road today are imported directly
from countries like Japan, Germany, Korea and US.

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PRODUCTION HUBS
A major chunk of India's automobile manufacturing industry
is based in and around the city of Chennai ("Detroit of
India“), accounting for 60 per cent of the country's
automotive exports.
Gurgaon and Manesar are hubs where most of the cars in
India are manufactured or assembled.
The Chakan corridor near Pune, Maharashtra is another
vehicular production hub.
Halol in Gujarat, Aurangabad in Maharashtra, Kolkatta in
West Bengal are some of the other automotive
manufacturing regions around the country
TREND IN THREE YEARS
Exports from India touched 3,31,539 units in FY09 as
against 2,11,112 units in the previous financial year.
Overseas presence with exports from India by registering a
growth of 57.04% in the last fiscal.
Overall vehicle exports from India grew by 23.60% at
15,30,660 units in the last financial year, while the same
stood at 11,38,333 units in the FY07.
Exports growth in the financial year 2009 was robust also in
the two-wheeler category, which registered 22.50 per cent
rise at 10,04,174 units as against 7,69,713 units in the year
2007-08.
CLASSIFICATION OF COMMODITIES
INDIAN AUTOMOBILE EXPORT SUMMARY

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INDIAN AUTOMOBILE EXPORT SUMMARY

Country wise

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INDIAN AUTOMOBILE EXPORT SUMMARY

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INDIAN AUTOMOBILE EXPORT SUMMARY

Decreased export
commodities

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INDIAN AUTOMOBILE IMPORT SUMMARY

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INDIAN AUTOMOBILE IMPORT SUMMARY

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INDIAN AUTOMOBILE IMPORT SUMMARY

Increased Import
commodities
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INDIAN AUTOMOBILE IMPORT SUMMARY

Decreased Import
commodities
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DOMESTIC INDUSTRY SCENARIO
 The cumulative growth of the Passenger Vehicles segment
during April 2007 – March 2008 was 12.17%.
 Passenger Cars grew by 11.79%, Utility Vehicles by
10.57% and Multi Purpose Vehicles by 21.39% for the
year 2007-08.
 The Commercial Vehicles segment grew marginally at
4.07%. While Medium & Heavy Commercial Vehicles
declined by1.66%, Light Commercial Vehicles recorded a
growth of 12.29%.
 Three Wheelers sales fell by 9.71%.
 Two Wheelers registered a negative growth rate of 7.92%
during 2007-08.

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AUTOMOBILE DOMESTIC SALES TRENDS

Categories 2003- 2004-05 2005- 2006-07 2007-08 2008-09 2009-10

04 06
Passenger
Vehicles 902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,949,776

Commercial
Vehicles 260,114 318,430 351,041 467,765 490,494 384,194 531,395

Three
Wheelers 284,078 307,862 359,920 403,910 364,781 349,727 440,368

Two
Wheelers 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231

Grand Total
6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,292,770

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SWOT OF INDIAN AUTOMOBLIE
SECTOR
 Strengths:
1. Cost competitiveness in terms of Labour and Raw
material
2. Established manufacturing base
3. Qualified and skilled man power
4. Growing domestic automotive industry
5. Manufacturing capabilities with international quality
standards
6. High operational efficiency

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 Weakness:
1. Low investment in Research and Development
2. Limited knowledge of product liability and offshore
warranty handling
3. Limited domestic market for various components
inhibiting capacity creations.
4. Comparatively poor infrastructure for supply chain and
exports
5. Lack of experience in system integration

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 Opportunities:
1. The growing need to outsource
2. Higher frequency of introducing of newer models by
automakers
3. Global market opportunity itself is the ultimate
opportunity provided by auto industry.
4. Leverage on product engineering expertise to improve the
worthiness and exports of auto component.
5. Acquisition in foreign markets

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 Threats:
1. Competition from other low cost
countries like China, Taiwan, Thailand etc.
2. Expansion of the European Union- inclusion of Hungary,
Czech Republic Poland etc which are major exporting
countries to western Europe.
3. Appreciation of Rupee
4. Developments of new technologies like fuel cell,
hydrogen powered vehicles, which may affect the auto
component industry.

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DISCUSSION ON ECONOMICAL IMPACT
In the last decade their share in the Indian economy is
around 5% of GDP.
The Indian automobile industry employs half a million
people in the organised sector and about ten million
people in the unorganised sector.
Automobile Exports registered a growth of 22.30 percent
during the current financial year.
Manufacturing units exceeded 18,04,619 this FY.
Till 2009-10 the Import : Export ratio, is in the trend of
1.75:1.

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CHALLENGES
 The internal barriers in the country and constraints at
international level had sluggish down the industry growth,
these barriers predominantly are hindrances like–Tax
structure especially the disparity in custom and excise
duties on the raw material of auto components, and
automobiles.
 The unavailability of resources at reasonable cost for
example- Power, Skilled Labour, Technology etc is also a
major constraint.

International Journal of Economics and Business Modeling

ISSN:0976–531X & E-ISSN:0976–5352, Vol. 1, Issue 2, 2010
Bibliography
[Link]
Ancillaries/Automobiles/[Link]
[Link]
sectors/[Link]
Society for Indian Automobile Manufacturers
Department of Heavy Industries
Automotive Component Manufacturers Association of India
Data sheet 1 Datasheet 2