Header Ads

"Make in India"- A boost to the Indian automobile sector

The augmentation of “Make in India” campaign has given a golden opportunity for the auto sector in India to flourish with a hope of good possible investments in the respective segments. This campaign has been a welcome move for all the manufacturing industries which contribute to nearly 22% of country’s GDP.To create jobs for the nearly 10 million work forces that enters the market every year, the country needs to move away from services driven model to a labor intensive manufacturing driven growth. The current investment trend for the Auto sector in India depicts a growth in manufacturing of indigenous made automobile products. But it’s not all about campaign, there has to be some reasons for attracting auto giants towards India.

Geographical location of India being closer to the key automotive markets like the ASEAN, Japan, Korea and Europe ,cost competitiveness, low investment rates etc make India an attracting hub for Auto sector. India being the Fourth largest producer of steel in the world and Cost of making steel significantly lower than competitive nations is also a prime reason. A growing working population, an expanding middle class and increasing disposable incomes in the rural agro-sector are expected to remain key demand drivers .While India has made remarkable progress in building new roads, highways, expressways and support infrastructure like airports, ports, railways and power plants leading to moderate infrastructure growth .It is imperative to recognize that infrastructure is a major driver of growth for auto industry. For example China has provided a huge competitive advantage for their industry by focusing on infrastructure development.

India is now the sixth-largest automobile market, behind China, the US, Japan, Brazil and Germany. In calendar year 2013 the Chinese market for passenger and commercial vehicles was 22 million units, followed by the US (15.88 million), Japan (5.37 million), Brazil (3.76 million), Germany (3.25 million) and India (3.24 million), according to OICA, a Paris-based federation of automobile manufacturers. So the growing demand in auto market in India remains a primary reason for drawing investments into the country.

This has been a decade of growth and up gradation for India in manufacturing sector. But it still lags behind when compared to China and other developing nations in terms of ease of doing business. Getting permits, tax related issues, political involvement are few key reasons that obstruct ease of starting business. But “Make in India” campaign have tried to bring a change in these issues and have created a positive outlook for the future in auto sector. The Auto manufacturing sector establishment in India will render boost to the GDP as well as the economical conditions. It would be exciting to see in future how Indian Auto manufacturing sector will contribute in future to the economy. 

No comments

Powered by Blogger.