Automobile Industry Essay

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Introduction- A overview of Indian automotive sector The Automobile Industry in India is attaining significant growth at a rapid pace with broadening domestic and international markets in the past 15 years. This industry, at present has achieved a turnover of Rs. 1,65,000 crores. An investment of Rs. 50000 crores has already been made and another Rs. 35000 crore is in the conduit. This industry caters to a labour utilization to the tune of 1.31 crore people with 17% contribution to the indirect taxes. However, with all these in context, Indian Automobile Industry is destined to become one of the largest in the world. India already ranks second globally in two- wheeler production, eleventh in passenger car production and thirteenth in the commercial vehicle segment. As a result of the expanding industrial base and increased spending power domestically, India has the potential to reach within the top five slots globally in all segments of automobile production. India is now a favoured location for auto majors due to the factors of being pivotal in manufacturing and providing qualified manpower at competitive costs. This is being augmented by the stasis of the Western auto market which has led to capacities shifting and capital flow towards the Indian side. The Auto component section is another off shoot of this industry with its turnover estimated to reach around 2.3 lakh crore in 2015-16. The automobile OEMs (Original Equipment Manufacturer) has a multiplier effect as they create ripples leading to the setting up of auto component suppliers and other ancillaries thus leading to huge investments and indirect employment. Tamil Nadu- leader in India- Auto production: Within India, Tamil Nadu acts as the pioneer when it co... ... middle of paper ... ...near Chennai which would in turn attract ancillary industries. Similarly, an Auto city has been proposed which would cater to the prototyping, manufacturing and designing. Auto Supplier Parks and Automotive Industrial Development Centre (AIDC) would also augur well for the development of this industry. Weaknesses: However, even in spite of the entire favourable climate existing, there are some pitfalls which could be identified. They include, power shortage with further worsening of power situation, need for road and other infrastructure to keep in pace with demand, deteriorating port conditions, low intellectual property protection, high tax rate, risk averse population with low consumption rate and high savings rate, little spending on Research and Development, monopolistic auto component manufacturers in certain segments and high petroleum prices.

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