IT & AUTOMOBILE SECTOR

Automobile Industry
• The Automobile industry in India is one of the largest in the world and one of the fastest growing globally. • The industry has a turnover of more than USD $35 billion and provides direct and indirect employment to over 13 million people. • The Indian Automobile Industry manufactures over

11 million vehicles and exports about 1.5 million
each year.

Automobile Industry
• India's world. • India is set to overtake Brazil to become the sixth largest passenger car and commercial vehicle

manufacturing industry is the seventh largest in the

passenger vehicle producer in the world, growing 16-18
per cent to sell around three million units in the course of 2011-12. • India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.

Liberalization in Automotive Industry
• The Indian automotive industry embarked a new journey

in 1991 with de-licensing of the sector and subsequent
opening up for 100% FDI. • The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. • Since then almost all global majors have set up their facilities in Indian taking the level of production from 2 million in 1991 to over 10 million in recent years.

Automobile Industrymarket Size
• India is home to 40 million passenger vehicles. • More than 3.7 million automotive vehicles were produced in India in 2010 making the country the

second fastest growing automobile market in the
world.

Automobile Industrymarket Size
• According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. • By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles

on the nation's roads.

Automobile IndustryExports
• The exports in automotive sector have grown on an average compound annual growth rate of 30% per year for the last seven years. • India's automobile exports have grown consistently and reached $4.5 billion in 2010-11. • India's automobile exports are expected to cross $12 billion by 2014.

Industry Conditions
• The automobile manufacturing sector is characterized by a high cyclical growth patterns, high fixed cost and break-even point levels, and an excessive number of participants. • Some of the barriers that need to be overcome by a new entrant include: the cost of developing high

volume

production

facilities

to

benefit

from

economies of scale

Industry Conditions
• The ability to gain access to technology of major operators, as the present incumbents include some of the largest multinationals, that have considerable claims to new technology. • The relative large size of domestic market, together with high competition, has already seen significant

rationalization of this industry.

Industry Volatility
• The level of volatility is medium. • According to the Economic Times of India, economic liberalization foreign currency – allowing unrestricted and export

Foreign Direct Investment (FDI) and removing
neutralization obligations – has been also been one of the key to

India's automotive volatility.

Industry Volatility
• This has been the result of fluctuations in metal prices and fuel prices, as well as changes in legislation and assistance packages. • India's increasing per capita disposable income and growth in exports is playing a major role in the rise and the competitiveness of the industry.

Advantage In India
• India holds huge potential in the automobile sector including the automobile component sector owing to its technological, cost and manpower advantage. • India has a well developed, globally competitive Auto Ancillary Industry and established automobile testing and R&D centres.

• The country enjoys natural advantage and is among
the lowest cost producers of steel in the world.

Automobile Industry
• India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies. • In 2010, Hyundai Motors alone exported 300,000 cars made in India.

• Nissan Motors plans to export 250,000 vehicles
manufactured in its India plant by 2012.

Automobile Industry
• Ford Motors announced its plans to set up a plant in

India with an annual capacity of 250,000 cars for US$500
million. • General Motors announced its plans to export about 50,000 cars manufactured in India by 2011. • The company said that the plant was a part of its plan to make India the hub for its global production business. • Fiat Motors also announced that it would source more than US$1 billion worth auto components from India.

Passenger Vehicle Manufacturers
• • • • • • • • • • • • BMW India Fiat India Ford India General Motors India Honda Siel Hyundai Motor India Land Rover Maruti Suzuki Mercedes-Benz India Mitsubishi Nissan Motor India Renault India • • • • • • • • • • • Skoda Auto India Volkswagen India Chinkara Motors Hindustan Motors ICML Mahindra Premier Automobiles Limited San Motors Tata Motors Toyota Kirloskar Audi India

Commercial Vehicle Manufacturers
Force Hindustan Motors Premier Tata AMW Eicher Motors VE Commercial Vehicles Limited • Ashok Leyland • • • • • • • • • • • • • • • • Mahindra Navistar Swaraj Mazda Volvo Tatra MAN Mercedes-Benz Daimler AG BharatBenz Kamaz Vectra

Key Competitors
• Tata Motors Market Share: Commercial Vehicles 63.94%, Passenger Vehicles 16.45% • Maruti Suzuki India Market Share: Passenger Vehicles 46.07% • Hyundai Motor India Market Share: Passenger Vehicles 14.15% • Mahindra & Mahindra Market Share: Commercial Vehicles 10.01%, Passenger Vehicles 6.50%, Three Wheelers 1.31% • Ashok Leyland Market Share: Commercial Vehicles 22%

Total Production
• • • • • • • • • • • 3,536,783--2010 2,641,550--2009 2,332,328--2008 2,253,999--2007 2,019,808--2006 1,628,755--2005 1,511,157--2004 1,161,523--2003 894796 --2002 814611 --2001 801360 --2000

% Change
--- 33.89 --- 13.25 --- 3.35 --- 10.39 --- 19.36 --- 7.22 --- 23.13 --- 22.96 --- 8.96 --- 1.62 --- (-2.10)

Contribution to GDP
• Automobile industry is currently contributing about 5% of the

total GDP of India.
• India's current GDP is about $1.4 trillion and is expected to grow to $3.75 trillion by 2020. • The projected size in 2016 of the Indian automotive industry varies between $122 billion and $159 billion including USD 35 billion in exports. • This translates into a contribution of 10% to 11% towards India's

GDP by 2016, which is more than double the current
contribution.

Objectives
• Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country. • Promote a globally competitive automotive industry and emerge as a global source for auto components. • Establish an international hub for manufacturing small,

affordable passenger cars and a key center for
manufacturing Tractors and Two-wheelers in the world.

Objectives
• Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry. • Conduce incessant modernization of the industry and facilitate indigenous design, research and development.

• Steer India's software industry into automotive
technology.

Objectives
• Assist development of vehicles propelled by alternate energy sources.

• Development of domestic safety & environmental standards at par with international standards.

Key Factors
• Key Sensitivity. • Consumer Sentiment Index. • Domestic Goods Price – Metal – Iron and Steel. • Import and Export Taxes (Duties) – Motor Vehicle Tariffs.

• World Price - Energy – Crude Oil.

Key Statistics
• SIAM expects India's car sales to grow 2-4 per cent in the fiscal year ending march 2012 while a growth of 13-15 per cent is projected in commercial vehicles' sales segment. • Car sales in November 2011 stood at 165,925 cars. • Sales of commercial vehicles increased by 18.05

percent to 70,634, while motorcycle sales rose 19.93
percent to 933,465 of them in November.

Key Statistics
• Total sales of vehicles across categories witnessed a growth of 19.39 per cent to 1571,342 units in November 2011 from 1316,118 units in the corresponding period last year. • The sales of scooters increased by 50.74 per cent to 231,710 units from 153,716 units in November 2010.

• While that of three-wheelers stood at 49,255 units in
November 2011.

Drawbacks
• Even with this rapid growth, the Indian automotive

industry's contribution in global terms is very low.
• This is evident from the fact that even thought passenger and commercial vehicles have crossed the production figures of 3.5 million in the year 2010,[ yet India's share is about 3.28% of world production of 70.53 million passenger and commercial vehicles.

India's automotive exports constitute only about 0.3% of
global automotive trade.

IT SECTOR
• It has grown from US $ 150 million in 1991-92 to US $ 75 billion in year 2010. • India’s GDP has grown significantly from 1.2% in 1999-2000 to cross 7.5% in FY10. • The sector has been growing at an annual rate of 28% per annum.

• IT Exports is account for 35% of the total exports from
India.

Liberalization in IT Industry
• Change in industrial policy leads to transformation of IT

industry.
• Post 1990, a 100% income tax exemption was extended to profits from software exports, and the double taxation of software imports was eliminated. • The duty for software imports was reduced to 110% in 1992, 85% in 1993, split in 1994 to 20% for applications software and 65% for system software, and then reduced to 10% for both categories in 1995.

Liberalization in IT Industry
• STPI was created to facilitate growth of software industry. • In 1996 internet services was started in India by VSNL a public sector company. • Multiple technologies were started evolving due to development of IT industry.

• Various steps had been taken towards a stronger
infrastructure and reduced cost base.

Liberalization in IT Industry
• Peak rate of basic customs duty is 10%.

• Customs duty on specified raw materials and inputs used
for manufacture of electronic components and optical fibres-cables is 0%.

• The mean rate of excise duty (CENVAT) is 8%.
• Microprocessors, Hard Disc Drives, Floppy DiscDrives, CD ROM Drives, DVD Drives/DVD Writers, Flash Memory and

Combo-Drives are exempted from excise duty.
• Central Sales Tax (CST) has been reduced from 3% to 2%.

IT SECTOR
• India’s IT success represents the emergence of another elite enclave, with increased inequality the result. • The IT sector can be an important source of growth for India if the global demand for these products and services is likely to grow rapidly.

• If the growth of the sector has positive spill over
benefits to the rest of the domestic economy.

IT SECTOR
• The sector is estimated to have grown by 19 per cent in the FY2011, clocking revenue of almost US$ 76 billion. • The export revenues are estimated to have aggregated to US$ 59 billion in FY2011 and contributed 26 per cent as its share in total Indian exports. • The workforce in Indian IT industry will touch 30 million by

2020 and this sunrise industry is expected to continue its
mammoth growth, expect various industry experts.

IT SECTOR
• The IT-BPO sector has become one of the most significant growth catalysts for the Indian economy. • Poised to become a US$ 225 billion industry by 2020.

• The industry has played a significant role in transforming
India’s image from a slow moving bureaucratic

economy to a land of innovative entrepreneurs and a

global player in providing world class technology
solutions and business services,

strengths of the Indian IT sector
Highly skilled human resource; · Low wage structure; · Quality of work; · Initiatives taken by the Government (setting up HiTech Parks and • implementation of e-governance projects); • · Many global players have set-up operations in India like Microsoft, Oracle, • Adobe, etc. • • • •

• Following Quality Standards such as ISO 9000, SEI CMM etc.; • · English-speaking professionals; • · Cost competitiveness; • · Quality telecommunications infrastructure

weaknesses of the sector
Absence of practical knowledge; · Dearth of suitable candidates; · Less Research and Development; · Contribution of IT sector to India’s GDP is still rather small; • · IT development concentrated in a few cities only. • • • •

investment opportunities
• • • • • • • • Communication Infrastructure Optic Fiber Cable · Gateways · Satellite based Communication Wireless · Software Development · IT-enables Services · IT-enabled education · Data Centers & Server Farms

Impact On Indian Economy
• Growing share of the country’s GDP • Boosting the foreign exchange reserve of the country

• Employment generation
• Additional employment generation • Driving growth of other sectors of the economy • Encouraging balanced regional development

Impact On Indian Economy
• Front runner in practicing good corporate governance • Boosting the image of India in the global market

• Spurring first generation entrepreneurship
• Improving the product/service quality level

Core Competencies
• Availability of Large Human Resources • Indian Education System • Quality Manpower • Government Policies • Cost of Labour and resources

IT SECTOR -GDP
• Growing share of the country’s GDP: GDP has been Steadily increasing from a share of 1.2% in FY98 to 7.5% in FY10. • Boosting the foreign exchange reserve of the country: IT-BPO exports including hardware exports reached USD 47.3 billion in FY2009.

• Employment generation: direct employment in the
sector 1.9 million by end of FY10.

IT SECTOR
• The Indian IT industry is expected to grow at a CAGR of 15.6% to reach Rs 4,582.28 bn during 20082011. • The domestic IT market is expected to reach Rs 362.38 bn by 2011, at a CAGR of 264% during 2008–2011.

IT SECTOR
• The Indian IT industry has been one of the great success stories of modern India. • The power of middle class, first generation

entrepreneurship in India.
• The Indian IT industry has contributed significantly to Indian economic growth in terms of GDP, foreign exchange earnings and employment generation.

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