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India-Automotive sector- Blue eyed boy of Indian economy by Emilly Potter
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India-Automotive sector- Blue eyed boy of Indian economy |
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Automotive,Boating
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A sector in India which has witnessed exponential growth in the last couple of years, alongside telecom, is the automobilesector. Not only that, it has also carved a niche among the major producers of automobile in the world. Almost all major car manufacturing companies have recognized the potential of the Indian automotive market. This is evident from the sudden pop-up of manufacturing plants all over the country. As a third world country, India in automotive sector has become a leading force to reckon with. The days of red-tapism, license raj and bureaucratic hurdles are a distant past. Federal government has liberalized most parts of the economy, and those liberalization policies have been supplemented by state-level policies like; giving special preference to a particular industry based on multiple parameters. Chief among them was the subsidy or tax-breaks allowed to industries to set up their operations in remote parts of the states. These policies were initiated to uplift the socio-economically backward regions of the country. The irony of the situation is the so called socio-economic backward regions were rich in natural resources on which these industries were heavily dependent. Coming back to the automotive sector, the sudden burgeoning of the middle-class along with a steep rise in their disposable income has been instrumental in driving the high growth rate in India of automotivesector. As the demographics of India changed, so did the fortune of this once stagnated sector. It is evident by the mere fact that Indian automobile major, Mahindra and Mahindra motors has become the world’s largest manufacturer of tractors. A conductive credit policy adopted by various banks towards this sector both at the trade level as well as on the retail level has been instrumental to keep up this rally. In the financial year of 2010 alone, the Indian automobile sector has witnessed a growth rate of more than 30%. It is no wonder that all major automobile manufacturers are setting up their shops in India. Everyone wants to get their share of pie by leveraging on the economies of scale. The markets are flooded with new models and their multiple variants, competition between rival brands have heated up the market. India.inc which is on a global acquisition roll, have bought several iconic albeit sick brands. Notable among them is the take-over of British auto brand of Jaguar and Land Rover by Tata Motors and the acquisition of SsangYong by Mahindra & Mahindra Motors. To sum it up, the Asian elephant has arrived in the room and the world is awaking to its presence.
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