Automobile Industry in India:

The automobile industry in India is one of the largest and fastest growing industries globally. It contributes to the GDP of the country by 9%. The domestic sales reached new heights in the month of January 2010 with figures showing an increment of 44.9% compared to last years figure. The major contributor in the automobile sector is the two-wheeler segment with 75% market share. It is the second largest in the world, only after China. The segment has grown at an impressive Cumulative Aggregate Growth Rate of 17.4% during the last 16 years. The demand for motorcycles in India is driven by various factors, which include poor public transport infrastructure in most Indian cities, along with the increased purchasing power levels. Further, as the scale of operations have grown motorcycle manufacturing has become more efficient. The overall penetration of two-wheelers in India is of the order of 28% of all households. In the urban segment, the penetration is of the order of 45%, whereas in the rural segment, the penetration is only about 12% of the households. Clearly, the big drive in future will come from the rural segment. The growth of the Indian automobile industry has direct implication on the automobile product sector. Some of the factors that affect both the sectors are government regulations and policies, demand in the market, availability of raw materials and foreign investments.

GOVERNMENT REGULATIONS:
Besides demand, the government interventions have been greatly responsible for shaping up the automobile industry in India. Before 1991, the government policies were in the form of protection, indigenisation and regulation of the auto industry. Though these policies led to development of an indigenous industry development, it led to hugely unsatisfactory industry performance. Post 1991, the most important change in government policy was the one which relaxed the norms related to technology acquisition. The transfer of technology from countries like Japan (Suzuki motors) and increased competition from foreign players changed the dynamics of the industry. Also the liberalization policies followed by the government were hugely responsible for boosting the auto sector in the form of various changes. Few of them include: y y y y Customs duty on imports and raw materials Approval for foreign equity investments National Automotive Fuel Policy Excise Duty