The Economic System Of India
Essay by 24 • June 5, 2011 • 481 Words (2 Pages) • 1,319 Views
EXECUTIVE SUMMARY
1. The Indian Automotive Industry after de-licensing in July, 1991 has grown at a
spectacular rate of 17% on an average for last few years. The industry has now
attained a turnover of Rs. 1,65,000 crores (34 billion USD) and an investment of
Rs. 50,000 crores. Over of Rs. 35,000 crores of investment is in pipeline. The industry
is providing direct and indirect employment to 1.31 crore people. It is also making a
contribution of 17% to the kitty of indirect taxes. The export in automotive sector has
grown on an average CAGR of 30% per year for the last five years. The export
earnings from this sector are 4.08 billion USD out of which the share of auto
component sector 1.8 billion USD.
2. 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 though passenger and
commercial vehicles have crossed the production figure of 1.5 million in the year 2005-
06, yet India's share is about 2.37 percent of world production as the total number of
passenger and commercial vehicles being manufactured in the world is 66.46 million
against the installed capacity of 85 million units. Similarly, export constitutes only
about 0.3% of global trade.
3. It is a well accepted fact that the automotive industry is a volume driven industry
and a certain critical mass is a pre-requisite for attracting the much needed investment
in Research and Development and New Product Design and Development. R&D
investment is needed for innovations which is the life-line for achieving and retaining
the competitiveness in the industry. This competitiveness in turn depends on the
capacity and the speed of the industry to innovate and upgrade. No nation on its own
can make its industries competitive but it is the companies which make the industry
competitive. The most important indices of competitiveness are the productivity both of
labour and capital.
4. The concept of attaining competitiveness on the basis
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