Auto Industry : Future Outlook 1

The future of Indian Automobile market is bright as it looks forward to manufacturing and implementing new innovations such as electric cars as provided by Reva, alternate fuels like CNG and LPG, and probably customized Internet automobile orders.

Indian automobile makers are exporting to various destinations, in Africa, Asia, South America and even few European countries like, Italy, Spain, Netherlands, etc.

The auto component industry in India now equipped with significant advancement in its

technological capabilities, due to its alignment with major vehicle manufacturers in the country and abroad. These advancements have also increased their export potential.

Exports of Indian automobile sector have been continuously increasing, and are poised to reach greater heights as it has advantage over its competitors in few areas like:

-          Bringing down of trade barriers.

-          India’s competitiveness and quality-consciousness, which is crucial in auto sector.

Emerging trends:

Globalization is pushing auto majors to consolidate, to upgrade technology, and enlarge

product range, access new markets and cut costs. They have resorted to common platforms, modular assemblies and systems integration of component suppliers and e-commerce.

The component industry is undergoing vertical integration resulting into emergence of

‘systems and assembly suppliers’ rather than individual component suppliers. Thus, while most component suppliers are integrating into tier 2 and tier 3 suppliers, larger manufacturers and multinational corporations (MNCs) are being transformed into tier 1 companies.

Environmental Concerns:

• Environmental and safety concerns are leading to higher safety and emission norms in the country.
• India has already charted out a road-map for reaching EURO-II norms across the country as seven metropolitan cities of India simultaneously went to EURO-III norms by 2005.
• To meet the concomitant testing and certification activities relating to higher safety and emission norms, testing infrastructure in the country is being overhauled.
• Environmental pollution and the need to conserve existing supply of fossil fuels have led to search for alternative fuels.
• In addition to supporting greenfield research in this area, an ambitious phased programme to upgrade carbon fuel quality commensurate with higher emission norms is also being undertaken.

Government Regulations:

• Foreign direct investment norms have already been considerably relaxed.
• Unhindered import of automobiles, including new and second hand vehicles, has also been permitted.
• Most non-tariff barriers have also been relaxed or removed.
• The Government has moderated and lowered taxes and duties on automobiles, including customs duty.
• Value Added Tax (VAT) is also proposed to be introduced across the country from 1 April 2001.
• An ambitious programme to upgrade the quadrilateral of highways in the country, the Government is laying an eight-lane expressway linking all metropolitan and several vital capital towns across the country paving the way for movement of heavier haulage vehicles.