automobile industry

Topics: Automotive industry, Volkswagen Group, General Motors Pages: 10 (3022 words) Published: October 9, 2013
Key drivers for the growth of Indian Auto industry
Finance Availability
Poor public transport system
Improved Infrastructure
Low car penetration
Rising Family Income
Exchange of Cars
Favorable duty structure
Changing lifestyle
This policy aims to promote integrated, phased, enduring and self-sustained growth of the Indian automotive industry. The objectives are to:-  (i) Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country;  (ii) Promote a globally competitive automotive industry and emerge as a global source for auto components; (iii) Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world;  (iv) Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry;  (v) Conduce incessant modernization of the industry and facilitate indigenous design, research and development; (vi) Steer India's software industry into automotive technology;  (vii) Assist development of vehicles propelled by alternate energy sources;  (viii) Development of domestic safety and environmental standards at par with international standards. 2. BACKGROUND

2.1 Automotive industry has universal5ly emerged as an important driver in the economy. Although the automotive industry in India is nearly six decades old, until 1982, only three manufacturers - M/s. Hindustan Motors, M/s. Premier Automobiles and M/s. Standard Motors tenanted the motor car sector. Owing to low volumes, it perpetuated obsolete technologies and was out of sync with the world industry. In 1982, Maruti Udyog Ltd. (MUL) came up as a government initiative in collaboration with Suzuki of Japan to establish volume production of contemporary models. After the lifting of licensing in 1993, 17 new ventures have come up of which 16 are for manufacture of cars. This industry currently accounts for nearly 4% of the GNP and 17% 0f the indirect tax revenue. 3. EXTANT POLICY

3.1 Before the removal of QRs with effect from 01-04-2001, the policy placed import of capital goods and automotive components under open general licence, but restricted import of cars and automotive vehicles in Completely Built Unit (CBU) form or in Completely Knocked Down (CKD) or in Semi Knocked Down (SKD) condition. Car manufacturing units were issued licences to import components in CKD or SKD form only on executing a Memorandum of Understanding (MOU) with the Director General Foreign Trade (DGFT). 11 companies signed MOUs with DGFT under which they agreed to:

(i)Establish actual production of cars and not merely assemble vehicles; 

(ii)Bring in a minimum foreign equity of US $ 50 Million if a joint venture involved majority foreign equity ownership;

 (iii)Indigenise components upto a minimum of 50% in the third and 70% in the fifth year or earlier from the date of clearance of the first lot of imports. Thereafter the MOU and import licensing will abate; 

(iv)Neutralise foreign exchange outgo on imports (CIF) by export of cars, auto components etc. (FOB). This obligation was to commence from the third year of start of production and to be fulfilled during the currency of the MOU. From the fourth year imports were to be regulated in relation to the exports made in the previous year. CURENT STATUS OF INDIAN AUTOMOTIVE INDUSTRY

4.1 The industry encompasses commercial vehicles, multi-utility vehicles, passenger cars, two wheelers, three wheelers, tractors and auto components. There are in place 15 manufacturers of cars and multi utility vehicles, 9 of commercial vehicles, 14 of Two/Three Wheelers and 10 of Tractors besides 5 of engines. With an investment of Rs.50,000 crores, the turnover was Rs. 59,500 crores in Automotive...
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