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INDIAN AUTOMOTIVE INDUSTRY: AUTOMOTIVE MISSION PLAN

Posted by Connie R. Aponte on November 25, 2013 in Automotive industry |

AUTOMOTIVE MISSION PLAN

India’s Automotive Mission Plan (AMP) 2006-2016 is a collaborative effort between the Indian government, the automotive industry, and academia. 11 The stated vision of AMP is for India “to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of U.S. $145 billion accounting for more than 10 percent of the GDP and providing additional employment to 25 million people by 2016.”12 India is currently the eleventh largest passenger car market in the world and aims to be the seventh largest market by 2016. While the auto industry has experienced strong growth over the past decade, it still plays a small role in the global industry.

According to AMP, India has about 2.37 percent of the world production of passenger and commercial vehicles and exports from India contribute approximately 0.3 percent of the global auto trade.

The AMP makes a number of suggestions for actions to be taken by both the government and industry in order for India to fulfill the goals laid out in the plan. For example, they estimate an investment of approximately $35-40 billion in the auto sector over the 2006-2016 time period will be required to implement AMP. The government’s responsibility would be to “facilitate infrastructure creation, promote the country’s capabilities, create a favourable and predictable business environment, attract investments and promote R&D.” 13 Industry’s responsibility concerns issues such as designing and manufacturing quality products, improving productivity, maintaining costs, among others. AMP also calls for the formation of an appropriate development policy; improving road, rail, port, and energy infrastructure; expanding demand for automobiles domestically; and, developing a roadmap to address environmental and safety concerns.

CONCLUSIONS

Given the large population and growing middle class, India has the potential to develop into a significant market for automobile manufacturers. With a large, English speaking, relatively low- cost labor pool, India could eventually serve as a major regional export hub throughout Asia, Africa, and Europe. Mahindra & Mahindra, in fact, is already developing plans to begin selling automobiles in the United States.

However, there are a number of factors that must be overcome in order for India, along with automobile manufacturers, to fully realize the potential in the Indian market. In particular, logistical transportation infrastructure capabilities will need to be improved to meet domestic and export needs. Based simply on the amount of investments by GM and Ford alone, it is clear that foreign vehicle manufacturers view India as a crucial player in the future of the automotive industry as a regional export hub, and as a supplier of automobiles and automotive parts globally.

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