Growth and Evolution of Automobile Sector in India


Table of Contents

Automobile sector has been and will remain vital element of the economic growth of the company and it is one of the largest automobile Industry in the world. Evolution of Automobile Industry can be viewed in 4 qualitatively distinct periods. The evolution depends on the advancements in technology.

  • The Period Before 1982- characterized by closed market.
  • In the period of 1983 to 1992 – Dominated by joint ventures
  • The period 1993-2007 characterized by de-licensing of the sectors
  • The period 2008 onwards internationalization and global presence

Growth and Evolution of Automobile Sector in India 1

The Automobile sectors are divided in to 4 Categories –

Two wheelers:- Bikes, motorcycles, scooters are the example of two wheelers. It can carry 1 or 2 person.

Passenger Vehicles:- it includes passenger cars, utility vehicles, multipurpose vehicles.

Commercial Vehicles:- this is the category of light or medium heavy vehicle.

Three Wheelers:- this category includes the passenger carriers and goods carriers.

Following factors determining the growth of Industry:-

  • The demand of automobiles depends on the fuel economy because the purchase decision of the fuels, determine the delivery of Performance oriented goods.
  • Population of the country as young population are much interested in cars.
  • Technology modernization fund
  • Skilled workers at inexpensive rate
  • Market segments
  • Products innovation

In the Year 1930 India was the importer of automobiles and the Indian Automobile industry started it’s own manufacturing unit in 1940.

  • Customers always want the fuel efficient automobiles,
  • Value for money
  • Affordable

At Present India is the largest tractor manufacturer , 2nd largest 2 wheeler and bus manufacturer, 5th largest heavy truck manufacturer, 6th largest car manufacturer,8th largest commercial vehicle manufacturer.

Government Policy for the growth of Automobile Sectors:-

  • The government give the automatic approval for foreign equity investments up to 100% with no criteria.
  • Manufacturing are exempted from licensing
  • Government provides rebate on the R&D expenditure.
  • Centers of excellent with focus on low cost manufacturing
  • Excise duties are reduced to 8% from 12%
  • Automotive Mission Plan’s 2006-16:-
  • Additional incentives for industrial projects
  • Rebates in land cost
  • Relaxation in stamp duty exemption

Automobile export:-

As per the report released by Society of India Automobile manufacturers (SIAM), total of 4,595,000 units exported by the Indian automobile exporters. Two wheelers have the largest contribution of 3,258,883 units.

The Government provides the benefits under MEIS Scheme which stands for Merchandise exports from India Scheme, launched by the government in April 2015. Under MEIS Scheme exporters can avail the benefits of 2% – 7% on the FOB value of exports on the eligible goods. On 13th March 2020 Government approved RoDTEP Scheme which replaced existing MEIS Scheme and will be implemented in a phased manner.


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