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Discussion about impact on Indian

economy by Automobile sector.(International trade perspective)

Presented by:

Kritika Arora

Prakash G

Prateek Kr. Sawhney

A PART OF: GROWTH PROSPECTS OF THURST AREAS OF INDIANEXPORTS


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INTRODUCTION

The first commercial automobile ran on Indias road was in 1897,

which was imported directly from Germany.

By 1940, Indian automobile sector got a start up by EmbryonicAutomotive industry. By1950 manufacturing of parts for

automobiles started.

The entry of foreign automobile industries after 1970s gave the

complete shape for Indian automobile industry and a start up

for its growth.

The liberalization policy and weakening of license raj by the year

1991, allowed the automobile industries to promote their

operations in a large scale.


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INDIAS AUTOMOBILE SECTOR

After 1991, the liberalization policy for foreign trade hasopened the door for foreign Automobile industries.

Initial entry was majorly by Imports and JVs with IndianAuto tycoons Bajaj, Maruti, Tata, TVS, Ashok Leyland, etc.,

By 1995, several automobile industries were set in India,where parts were imported and assembled for sales inIndian subcontinent .

Today around 70 major automobile manufacturers havetheir ventures in India either on its own or JV or strategicalliance with Indian companies or foreign companies.

More than 1043 major players are there contributing toIndian automobile industry growth ad development.


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FIGURES..

The automotive industry (including components & tyres)has already attained a turnover ofRs. 2, 20,600 crore.

The industry provides direct and indirect employment to

13.1 million people.The contribution of the automotive industry to GDP hasrisen from 2.77% in 1992-93 to 4.14% in 2008-09.

The industry is also making a contribution of 17% to thekitty of indirect taxes of the Government.

In 2010 (April-August), overall automobile exportsregistered a growth rate of 48.42 percent with industryproducing 7,063,063 vehicles.

http://commerce.nic.in/


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EXPORTS AND IMPORTS

After 1998, Indian automobile industry developed into a majorsector, assembling almost every car that was sold in Indiansubcontinent.

Imports were reduced by 15 times and exports were

promoted, compared to the number of automotives tradedpreviously.

More than 44 varieties of automobile are manufactured whichconstitutes the 59 different automobile sales such as Motorcycles, Cars, SUVs, Lorry, Bus etc.,

Around 84 major ancillaries for the automobile industry is beingimported for assembling and sales purpose in India.

6% of Indian automobiles on road today are imported directlyfrom countries like Japan, Germany, Korea and US.

http://commerce.nic.in


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PRODUCTION HUBS

A major chunk of India's automobile manufacturing industryis based in and around the city of Chennai ("Detroit of

India), accounting for 60 per cent of the country's

automotive exports.

Gurgaon and Manesar are hubs where most of the cars inIndia are manufactured or assembled.

The Chakan corridor near Pune, Maharashtra is another

vehicular production hub.

Halol in Gujarat, Aurangabad in Maharashtra, Kolkatta inWest Bengal are some of the other automotive

manufacturing regions around the country


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TREND IN THREE YEARS

Exports from India touched 3,31,539 units in FY09 asagainst 2,11,112 units in the previous financial year.

Overseas presence with exports from India by registering a

growth of 57.04% in the last fiscal.

Overall vehicle exports from India grew by 23.60% at15,30,660 units in the last financial year, while the same

stood at 11,38,333 units in the FY07.

Exports growth in the financial year 2009 was robust also in

the two-wheeler category, which registered 22.50 percent rise at 10,04,174 units as against 7,69,713 units in

the year 2007-08.


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CLASSIFICATION OF COMMODITIES


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INDIAN AUTOMOBILE EXPORT SUMMARY

51%

21%

10%

5%

13%

2009-2010

MOTR CARS & OTHR MOTR VHCLS FR TRNSPRT OF PERSONS(EXCL OF 8702)INCL RCNG CARS ETC

PARTS AND ACCESSORIES OF THE MOTOR VEHICLES OF HEADINGS NOS 8701 TO 8705

MOTORCYCLES(INCL MOPEDS)& CYCLS FTD WTH AUXLRY MOTOR,W/N WTH SIDE-CARS;SIDE-CARS

TRACTORS(EXCL TRACTORS OF HDG NO.8709)

Others

Commodity wise



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9%

7%

9%

5%

70%

2009-2010

U K U S A ITALY GERMANY Others

U K , 560.41

U S A, 435.91

ITALY , 525.72

GERMANY, 334.72

Others, 4312.51

Country wise



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18%

82%

2009-2010

WHEEL CHAIRS FR INVALID MCHNCLYPRPLD

OTHR INVALID CARRIAGES MCHNCLYPRPLD

Increased export

commodities



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86%

7%

5%2%

0%

2009-2010

OTHR VHCLS(>13 PERSONS) WTH CMPRSN-IGNTN INTRNL CMBSTN PISTON ENGINE

OTHR VHCLS(


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INDIAN AUTOMOBILE IMPORT SUMMARY

8%

78%

8%

6%

IMPORTSIN 2009-10MOTR CARS & OTHR MOTR VHCLS FR TRNSPRT OF PERSONS(EXCL OF 8702)INCL RCNG CARS ETC

PARTS AND ACCESSORIES OF THE MOTOR VEHICLES OF HEADINGS NOS 8701 TO 8705

PRTS & ACCSSRS OF VHCLS OF HDG 8711-8713

OTHERS



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KOREARP

CHINAPRP15

JAPAN1

OTHERS41

IMPORTSIN 2009-10



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47%

3%

50%

IMPORTS 2009-10

BABY & INVALIDCARRIAGES

PARTS OF BABYCARRIAGE

BABY CARRIAGES &

PARTS THEREOF

Increased Import

commodities



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86%

9%3%

2%

EXIN DATA BANK2009-10

CHASSIS FR VHCLSHDNG 8702 (>13

PERSONS)CHASSIS FR MOTORVHCLS HDNG 8705

CHASSIS FR VHCLSHDNG 8703 EXCP 3-

WHLDOTHERS

Decreased Import

commodities



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DOMESTIC INDUSTRY SCENARIO

` The cumulative growth of the Passenger Vehicles segmentduring April 2007 March 2008 was 12.17%.

` Passenger Cars grew by 11.79%, Utility Vehicles by 10.57%and Multi Purpose Vehicles by 21.39% for the year 2007-08.

` The Commercial Vehicles segment grew marginally at4.07%. While Medium & Heavy Commercial Vehiclesdeclined by1.66%, Light Commercial Vehicles recorded agrowth of 12.29%.

` Three Wheelers sales fell by 9.71%.` Two Wheelers registered a negative growth rate of 7.92%

during 2007-08.

http://www.siamindia.com/scripts/domestic-sales-trend.aspx


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AUTOMOBILE DOMESTIC SALES TRENDS

Categories 2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

2009-10

Passenger

Vehicles902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,949,776

CommercialVehicles

260,114 318,430 351,041 467,765 490,494 384,194 531,395

Three

Wheelers284,078 307,862 359,920 403,910 364,781 349,727 440,368

Two

Wheelers 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231Grand Total

6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,292,770

http://www.siamindia.com/scripts/domestic-sales-trend.aspx


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SWOT OF INDIAN AUTOMOBLIE

SECTOR

` Strengths:

1. Cost competitiveness in terms of Labour and Raw

material

2. Established manufacturing base

3. Qualified and skilled man power

4. Growing domestic automotive industry

5. Manufacturing capabilities with international quality

standards6. High operational efficiency

http://www.bioinfo.in


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` Weakness:1. Low investment in Research and Development

2. Limited knowledge of product liability and offshore

warranty handling

3. Limited domestic market for various components

inhibiting capacity creations.

4. Comparatively poor infrastructure for supply chain and

exports

5. Lack of experience in system integration



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` Opportunities:1. The growing need to outsource

2. Higher frequency of introducing of newer models by

automakers

3. Global market opportunity itself is the ultimate

opportunity provided by auto industry.

4. Leverage on product engineering expertise to improve

the worthiness and exports of auto component.

5. Acquisition in foreign markets



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` Threats:1. Competition from other low cost

countries like China, Taiwan, Thailand etc.

2. Expansion of the European Union- inclusion of

Hungary, Czech Republic Poland etc which are major

exporting countries to western Europe.

3. Appreciation of Rupee

4. Developments of new technologies like fuel cell, hydrogen

powered vehicles, which may affect the auto component

industry.



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DISCUSSION ON ECONOMICAL IMPACT

In the last decade their share in the Indian economy isaround 5% of GDP.

The Indian automobile industry employs half a million

people in the organised sector and about ten million

people in the unorganised sector.Automobile Exports registered a growth of 22.30 percent

during the current financial year.

Manufacturing units exceeded 18,04,619 this FY.

Till 2009-10 the Import : Export ratio, is in the trend of

1.75:1.



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CHALLENGES

` The internal barriers in the country and constraints atinternational level had sluggish down the industry

growth, these barriers predominantly are hindrances like

Tax structure especially the disparity in custom and

excise duties on the raw material of autocomponents, and automobiles.

` The unavailability of resources at reasonable cost for

example- Power, Skilled Labour, Technology etc is also a

major constraint.

International Journal of Economics and Business ModelingISSN:0976531X & E-ISSN:09765352, Vol. 1, Issue 2, 2010


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Bibliography

http://www.fundoodata.com/industry-companies/Automobile/Auto-Ancillaries/Automobiles/224.html

http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-

sectors/automobile.htm

Society for Indian Automobile Manufacturers

Department of Heavy Industries

Automotive Component Manufacturers Association of India

Data sheet 1 Datasheet 2


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