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Automobile Industry

Automobile Industry

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Published by: tiyathakur on Dec 23, 2009
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02/20/2013

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AUTOMOBILE INDUSTRY
The
automobile industry in India
 —the tenth largest in the world with an annual production of approximately 2 million units—is expected to become one of the major global automotiveindustries in the coming years. A number of domestic companies produce automobiles in Indiaand the growing presence of multinational investment, too, has led to an increase in overallgrowth. Following the economic reforms of 1991 the Indian automotive industry hasdemonstrated sustained growth as a result of increased competitiveness and relaxed restrictions.The monthly sales of passenger cars in India exceed 100,000 units
Tata Motors launches its first truck in collaboration with Mercedes-Benz.
History
In 1953, the government of India and the Indian private sector initiated manufacturing processesto help develop the automobile industry, which had emerged by the 1940s in a nascent form.Between 1970 to the economic liberalization of 1991, the automobile industry continued to grow
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at a slow pace due to the many government restrictions. A number of Indian manufacturesappeared between 1970-1980.Japanese manufacturers entered the Indian market ultimatelyleading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventureswith Indian companies.
Challenges faced by Indian Automotive Industry in the new age
The Indian automotive industry has been facing new challenges due to the rapid changes taking place during the last decade. This article discusses those challenges and initiatives taken by thegovernment to overcome them.The Indian auto industry is changing rapidly. During the last decade, many international automanufacturers, either by themselves or in partnership with Indian companies, have startedmanufacturing activities in India. The ancillary industries have also grown in tandem. Thequality of production in small- and medium-scale industries has improved to such an extent thatthey started exporting products to international manufacturers. The major breakthrough of recentyears is the unveiling of "Nano" by Tata Motors during the auto expo 2007. This has receivedworldwide attention and proved that India can not only design an automobile of internationalstandards but also execute the project at a much lower cost through innovative choice of components, materials, engine design etc.These developments in the auto sector have given new confidence to everyone related to the autoindustry and specifically to the government which resulted in the announcement of the AutoPolicy 2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indianauto sector is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to theeconomy. Every year two to three million people are expected to purchase new vehicles. Severalmillion vehicles and components are expected to be exported to both developed and developingnations. To achieve these goals, it is important that the present GDP growth rate, which is morethan 8 per cent, continues to remain at the same level for the next 8-10 years. The government is
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also giving some concessions to the auto industry. To realize the above growth predictions, it isimportant to overcome various challenges the industry is facing currently. Two of the foremostchallenges are the spiraling cost of fuel and the paucity of highly skilled manpower.
Rising oil price
International price of crude oil has crossed US$ 120 per barrel and is rising at an alarming rate.The forecast of market experts that the crude oil price will plateau around US$ 100 per barrelhas been proved wrong. The skyrocketing crude oil price rise will affect the economic growth of most of the nations of the world including India. The prospects of India and China of becomingeconomic superpower will be seriously affected. Also, the rise in oil prices will impact thegrowth of global automotive industry. Unless the use of alternative fuels increases, it is veryunlikely that the situation will change for the better.This necessarily means that more and more investments should be directed towards R&D,establishing mechanisms to translate R&D results into products and their efficientmanufacturing. This will also require radical redesigning of engines.
Human resources
The second major challenge is the creation of highly skilled human resource required for theauto industry. Auto industry, like many other industries is facing severe shortage of skilledtechnical as well as managerial manpower. This challenge becomes all the more daunting because faults lie at a more fundamental level of training infrastructure and the social perception.
Summary
The growth of auto industry in India will be contingent not just on domestic demand, but alsoequally on exports. Therefore, the present projections will become a reality if thrust is given tooriginal research that will yield breakthrough results. These results help in addressing the current
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