NEW MAN INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY STUDIES (ISSN: 2348-1390)

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Role of Automobile Industry in Employment Generation in India: An
Analysis of TATA Motors and Mahindra & Mahindra

Santosh Kumar Maurya

UGC- NET/JRF
Research Scholar, Department of Management Studies
Nehru Gram Bharati University, Allahabad

Abstract
The Indian automotive industry is being rapidly integrated into the global automotive supply
chain and global automotive companies are looking to India not only for its burgeoning
consumer market but also as an efficient supplier base. New technologies in the production
process are constantly being introduced, and processes in the sales and service arena are
shifting to meet the changing market. Today, it is amongst the main drivers of growth of Indian
economy. Tata, Hyundai, Fiat, Ford Motors, TELCO, Maruti Suzuki, Hindustan Motors,
Mahindra and Mahindra and Escorts has opened up numerous opportunities for persons with an
automobile engineering, mechanical engineering and technical diplomas in this area, not only
technical’s there are lots of middle level and low level workers also. With the establishment of
many automobile and ancillary manufacturing and assembling plants, both in the private and
public sectors, employment avenues are expanding in the fields of design and manufacturing of
automobiles. Increase in the production of commercial vehicles/ passengers cars, automobile
sector can expect to have a wide range of opportunities both for wage paid and self-employment
ventures in the coming years. In fact, the automobile industry is the barometer of the economic
and social transformation taking place in the country. It is one of the major sources of
employment and is likely to generate employment for thousands of new hands directly and
indirectly, in near future.
Keywords: Employment, Automobiles, Opportunities, Manufacturer.

Introduction
The automotive industry in India is one of the larger markets in the world and had previously
been one of the fastest growing globally, is now seeing flat or negative growth rates. India's

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passenger car and commercial vehicle manufacturing industry is the sixth largest in the world,
with an annual production of more than 3.9 million units in 2011. According to recent reports,
India overtook Brazil and became the sixth largest passenger vehicle producer in the
world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada,
Mexico, Russia, Spain, France, and Brazil), grew 16 to 18 per cent to sell around three million
units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter
of passenger cars, behind Japan, South Korea, and Thailand. In 2010, India beat Thailand to
become Asia's third largest exporter of passenger cars.

As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive
vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second
(after China) fastest growing automobile market in the world in that year. According to the
Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4
million by 2015, no longer 5 million as previously projected. By 2050, the country is expected to
top the world in car volumes with approximately 611 million vehicles on the nation's roads.
The majority of India's car manufacturing industry is based around three clusters in the south,
west and north. The southern cluster consisting of Chennai is the biggest with 35% of the
revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and the
northern cluster around the National Capital Region contributes 32%. Chennai, is also referred
to as the "Detroit of India" with the operations of Ford,
Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, and PSA
Peugeot Citroën is about to begin their operations by 2014. Chennai accounts for 60% of the
country's automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where
the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor
near Pune, Maharashtra is the western cluster with companies like General
Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land
Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a
major base of Mahindra & Mahindra with a UV assembly unit and an Engine assembly
unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster.
Another emerging cluster is in the state of Gujarat with manufacturing facility ofGeneral
Motors in Halol and further planned for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki
and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan
Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive
manufacturing regions around the country.
Car Companies in India – Latest Trends and Developments
India as a nation might be seeing a rate of economic growth that is the lowest in this decade but
some sectors are still performing well, as per experts and the automobile industry is one of them.
In the first 4 months of the 2012-13 fiscal car sales have increased in India by 5.6 percent as per
statistics provided by the Society of Indian Automobile Manufacturers (SIAM). The Society had
set a target of 10-12 percent for the period and the growth is still lesser than that. However,
compared to 2011-12, when the industry was pretty flat, these figures represent a better

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condition. IHS Automotive has forecast that by 2016 the yearly rate of growth of sales for the
automobile industry will be 10.9 percent taking the sales figure to approximately 4.88 million.

Government initiatives for Indian automobile industry

The Indian Government has introduced the National Automotive Testing and R&D Infrastructure
Project (NATRIP) that will look to create core competencies in the national automotive sector
that are at par with global standards. This project will also help the Indian auto industry become
a key part of the world economy. The project will aim to create the very best infrastructure in
testing, research and development, and validation and help the industry gain international repute.
The project will invest INR 1718 crores in 3 automotive centers across the country for
establishing top class homologation facilities. These centers are:
Table No.:1

Name Zone

Manesar Northern India

Ahmednagar and Pune Western India

Chennai Southern India

The government has also announced the Automotive Mission Plan for 2006-2016 and aims to
make India a global center for the automobile industry. The plan aims to focus on the following
areas:
• Making and designing of automobiles
• Making and designing of auto components

It also looks to take the industry output to 145 billion US dollars by 2016, which is expected to
account for at least 10% of the GDP by then. This can also generate extra job opportunities for
25 million people by that time. The plan also aims to make sure that the industrial production
reaches the INR 600000 crore marks by 2016 – at present the figure stands at INR 169000
crores. The plan will also look to increase the role played by this sector vis-à-vis the national
economy and other important parts of it. The plan also looks to bring up the automobile
certification and testing facilities in India at par with global standards.

Indian Automobile Industry Major Bodies

The Department of Heavy Industry of the Ministry of Heavy Industries and Public Enterprises is

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responsible for promotion of the national auto industry’s development and growth. It helps the
industry in its achievement plans in the following ways:
• Policy initiatives
• Promotion of technological up gradation and collaboration
• Appropriate interventions for trade and tariff restructuring
• Promotion of research and development
The Society of Indian Automobile Manufacturers (SIAM) is the leading industry body and
represents 46 of the top vehicle and engine makers in the country. It is a crucial medium of
communication for the industry with governmental, international and Indian organizations. It
functions in association with the various companies and is an active participant when it comes to
creating rules, policies, and regulations for the industry.
Table No.:2 Employment Generations in Automobile Sector of India
Year Employment status (in millions)
2007-08 10.0
2008-09 11.5
2009-10 12.5
2010-11 13.0
2011-12 13.1
Source: http://www.bls.gov/iag/tgs/iagauto.htm
Literature Review
According to India brand equity foundation 2012, manufacturing sector holds a key position in
the Indian economy. The ability of the manufacturing sector to absorb excess labor from the
agriculture sector and shift the same to services renders it the driving force in the development
process of an economy. While, the Indian manufacturing sector has witnessed remarkable growth
in recent years; its contribution to GDP and employment is well below its true potential. There is
a need for strong commitment from the government as well as the industry for the sector to enter
the next orbit of high growth and employment generation.
Ministry of External Affairs Government of India, 2012 says that Automobile industry one of the
key drivers of the national economy as it provides large-scale employment, having a strong
multiplier effect. Being one of the largest industries in India, this industry has been witnessing
impressive growth during the last two decades.
According to Sbhutani, Jun 2006, the automobile industry in the country is one of the key sectors
of the economy in terms of the employment opportunities that it offers. The industry directly
employs close to around 0.2 million people and indirectly employs around 10 million people.
The prospects of the industry also has a bearing on the auto-component industry which is also a
major sector in the Indian economy directly employing 0.25 million people.

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According to Rinki chakrabarty and others, in May 2003, they have found that over the last
decade, the Indian automobile industry has become more competitive. India now has developed a
skilled labor force in the automobile industry with the entry of global players and also growth in
the domestic industry.

Objectives of Study
1. To investigate the employment generation in Indian Automobile Industry.
2. To test the role of automobile industry in employment generation in India.

Hypothesis
H0: There is no significant role of Automobile industry in employment generation.
H1: There is significant role of Automobile industry in employment generation.
Research Methodology
The study is based on social research. In this paper we have used available facts or information
to analyze the factors and evaluation of the data.

Scope of Study
In the proposed study we will only investigate the employment generation in those companies
which have their production plants in Indian automobile industry. In this way we will try to
investigate growth of employment and upliftment of social status of employees.
Source of Data
This study is purely based on the secondary data such as annual report, magazine, news paper,
Indian automobile report, and automobile company website.
Population Size
We take entire automobile industry those who have established manufacturer plant in India.
Sample Size
This study involves the analysis with respect to the sample of two automobile manufacturer
companies in India namely- TATA and MAHINDRA & MAHINDRA out of 34 companies
which are engaged in manufacturing(in fact 122 automobile companies have business in India).
These two companies cover 21.77% of market share in automobile industry in the country.

Findings
We select only two automobile (car) manufacturers company TATA Motors and Mahindra
&Mahindra. In the respect of employment growth we choose five years employment data 2007-
08 to 2011-12. In five year data TATA Motors increase their employees 23,230 to 29,217 and

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Mahindra & Mahindra increase 5,690 to 15,147 (Table no.3) employees in their company. The
last five years employment growth tally as per Table No.4 shows that Tata Motors group is
25.77% and Mahindra & Mahindra group have massive change of more than 160%. This result is
also a danger alarm for TATA group for future growth of Mahindra And Mahindra. It may be
HR strategy of M&M for take over the largest share of Indian Automobile industry near future.
In India there has 34 car manufacturers company. In automobile industry the employees has semi
skilled and skilled person. With the reference of this five years data we say there is lots of
employment generation in automobile industry.
Table No.:3 Employment generations in TATA and Mahindra &Mahindra

Source: (http://www.tatamotors.com, Sixty-Seventh Annual Report 2011-2012 page-59

Table no.:4 Comparative growths in employment opportunities in Tata and Mahindra
&Mahindra in last five years

Source: Mahindra & Mahindra annual report march-2012

Suggestions
The automobile industry in India, there is lots of opportunities for the employment. This dynamic
industry currently accounts for almost 7% of our GDP and employing about 17 million people
both directly and indirectly. Contribution of India in global auto industry development is

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becoming increasingly important. There are so many associate company related to automobile
industry such as tyres, lights, rubber parts, steal parts, etc. Need of searching such resources by
which instead of petrol, diesel, and LPG gas needed to search other alternative which should be
cheaper for running of the automobile industry. In our suggestion government should be provide
subsidy in automobile industry and help in new research and development for the future growth
of employments generation in automobile industry.
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