Automotive
industry is the key driver of any growing economy. It plays a pivotal role in
country's rapid economic and industrial development. It caters to the
requirement of equipment for basic industries like steel, non-ferrous metals,
fertilisers, refineries, petrochemicals, shipping, textiles, plastics, glass,
rubber, capital equipments, logistics, paper, cement, sugar, etc. It
facilitates the improvement in various infrastructure facilities like power,
rail and road transport. Due to its deep forward and backward linkages with
almost every segment of the economy, the industry has a strong and positive
multiplier effect and thus propels progress of a nation. The automotive
industry comprises of the automobile and the auto component sectors.
In
India, automotive is one of the largest industries showing an impressive growth
over the years and has been significantly making increasing contribution to
overall industrial development in the country. Presently, India is the world's
second largest manufacturer of two wheelers, fifth largest manufacturer of
commercial vehicles as well as largest manufacturer of tractors. It is the
fourth largest passenger car market in Asia as well as a home to the largest
motor cycle manufacturer. The sector has shown great advances in terms of
development, spread, absorption of newer technologies and flexibility in the
wake of changing business scenario.
The
Indian automotive industry has made rapid strides since delicensing and opening
up of the sector in 1991. It has witnessed the entry of several new
manufacturers with the state-of-art technology, thus replacing the monopoly of
few manufacturers. The norms for foreign investment and import of technology
have also been liberalised over the years for manufacture of vehicles. At present,
100% foreign direct investment (FDI) is permissible under the automatic route
in this sector, including passenger car segment. The import of technology for
technology upgradation on royalty payment of 5% without any duration limit and
lump sum payment of USD 2 million is also allowed under automatic route in this
sector. The Indian automotive industry has already attained a turnover of Rs.
1,65,000 crore (34 billion USD) and has provided direct and indirect employment
to 1.31 crore people in the country.
The
growth of Indian middle class, with increasing purchasing power, along with
strong macro-economic fundamentals have attracted the major auto manufacturers
to Indian market. The market linked exchange rate, well established financial
market, stable policy governance and availability of trained manpower have also
shifted new capacities and flow of capital to the auto industry of India. All
these have not only enhanced competition in auto companies and resulted in
multiple choices for Indian consumers at competitive costs, but have also
ensured a remarkable improvement in the industry's productivity, which is one
of the highest in Indian manufacturing sector.
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