subject: Current Status and Future Outlook of Indian Automobile Industry [print this page] Current Status and Future Outlook of Indian Automobile Industry
Current Status of Indian Automobile Industry
The Indian Automobile Market is expected to grow at a Compounded Annual Growth Rate of 9.5 percent amounting to Rs. 13,008 million by 2010. The Commercial Vehicle Segment has been contributing to the automobile market to a great extent.
The modern automobile market in India has been considering certain key issues in the process of growth, which are as follows:
Customer care, and not just 'service'
Domestic as well as multinational investments
Searing through cut-throat competition
Road safety
Anti-pollution norms
Coordination with the government to enable advancement
Used vehicle trade
Future Outlook for the Indian Automobile Industry
The future of Indian Automobile market is bright as it looks forward to manufacturing and implementing new innovations such as electric cars as provided by Reva, alternate fuels like CNG and LPG, and probably customized Internet automobile orders.
Indian automobile makers are exporting to various destinations, in Africa, Asia, South America and even few European countries like, Italy, Spain, Netherlands, etc.
The auto component industry in India now equipped with significant advancement in its
technological capabilities, due to its alignment with major vehicle manufacturers in the country and abroad. These advancements have also increased their export potential.
Exports of Indian automobile sector have been continuously increasing, and are poised to reach greater heights as it has advantage over its competitors in few areas like:
- Bringing down of trade barriers.
- India's competitiveness and quality-consciousness, which is crucial in auto sector.
Emerging trends:
Globalization is pushing auto majors to consolidate, to upgrade technology, and enlarge
product range, access new markets and cut costs. They have resorted to common platforms, modular assemblies and systems integration of component suppliers and e-commerce.
The component industry is undergoing vertical integration resulting into emergence of
systems and assembly suppliers' rather than individual component suppliers. Thus, while most component suppliers are integrating into tier 2 and tier 3 suppliers, larger manufacturers and multinational corporations (MNCs) are being transformed into tier 1 companies.
Environmental Concerns:
Environmental and safety concerns are leading to higher safety and emission norms in the country.
India has already charted out a road-map for reaching EURO-II norms across the country as seven metropolitan cities of India simultaneously moved to EURO-III norms by 2005.
To meet the concomitant testing and certification activities relating to higher safety and emission norms, testing infrastructure in the country is being overhauled.
Environmental pollution and the need to conserve existing supply of fossil fuels have led to search for alternative fuels.
In addition to supporting greenfield research in this area, an ambitious phased programme to upgrade carbon fuel quality commensurate with higher emission norms is also being undertaken.
Government Regulations:
Foreign direct investment norms have already been considerably relaxed.
Unhindered import of automobiles, including new and second hand vehicles, has also been permitted.
Most non-tariff barriers have also been relaxed or removed.
The Government has moderated and lowered taxes and duties on automobiles, including customs duty.
Value Added Tax (VAT) is also proposed to be introduced across the country from 1 April 2001.
An ambitious programme to upgrade the quadrilateral of highways in the country, the Government is laying an eight-lane expressway linking all metropolitan and several important capital towns across the country paving the way for movement of heavier haulage vehicles.
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