The Automotive industry in India is one of the largest in the world and one of the fastest

growing globally. India manufactures over 11 million 2 and 4-wheeled vehicles and exports
about 1.5 million every year. It is the world's second largest manufacturer of motorcycles,
with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial
vehicle manufacturing industry is the seventh largest in the world, with an annual production
of more than 2.6 million units in 2009. In 2009, India emerged as Asia's fourth largest
exporter of passenger cars, behind Japan, South Korea and Thailand.

As of 2009, India is home to 40 million passenger vehicles and more than 2.6 million cars
were sold in India in 2009 (an increase of 26%), making the country the second fastest
growing automobile market in the world. According to the Society of Indian Automobile
Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and
more than 9 million by 2020. By 2050, the country is expected to top the world in car
volumes with approximately 611 million vehicles on the nation's roads.

A chunk of India's car manufacturing industry is based in and around the city of Chennai,
also known as the "Detroit of India". with the Indian city accounting for 60 per cent of the
country's automotive exports. Gurgaon and Manesar near New Delhi are hubs where all of the
Maruti Suzuki cars in India are manufactured. The Chakan corridor near Pune, Maharashtra is
another vehicular production hub with General Motors, Volkswagen/ Skoda, Mahindra and
Mahindra in the process of setting up or already set up facilities. Halol in Gujarat,
Aurangabad in Maharashtra, Kolkatta in West Bengal are some of the other automotive
manufacturing regions around the country.

History of automobile:

Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed
restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki
and Mahindra and Mahindra, expanded their domestic and international operations. India's
robust economic growth led to the further expansion of its domestic automobile market which
has attracted significant India-specific investment by multinational automobile
manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000
units and has since grown rapidly to a record monthly high of 182,992 units in October 2009.
From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only
10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in
Switzerland for example ) this progression is unlikely to stop in the coming decade
.Congestion of Indian roads, more than market demand, will likely be the limiting factor.

The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly.
Embryonic automotive industry emerged in India in the 1940s. Following the independence,
in 1947, the Government of India and the private sector launched efforts to create an
automotive component manufacturing industry to supply to the automobile industry.
However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and
the license raj which hampered the Indian private sector. After 1970, the automotive industry
started to grow, but the growth was mainly driven by tractors, commercial vehicles and
scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market
ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated
joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building
motorcycles and light commercial-vehicles. It was at this time that the Indian government
chose Suzuki for its joint-venture to manufacture small cars. Following the economic
liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and
multi-national car companies launched operations. Since then, automotive component and
automobile manufacturing growth has accelerated to meet domestic and export demands.[23]

Supply Chain of Automobile Industry:

The supply chain of automotive industry in India is very similar to the supply chain of the
automotive industry in Europe and America. The orders of the industry arise from the bottom
of the supply chain i. e., from the consumers and goes through the automakers and climbs up
until the third tier suppliers. However the products, as channelled in every traditional
automotive industry, flow from the top of the supply chain to reach the consumers.
Automakers in India are the key to the supply chain and are responsible for the products and
innovation in the industry.

The description and the role of each of the contributors to the supply chain are discussed
below.

Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic
and aluminium to the second tier suppliers.

Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier
Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs.
They also provide engineering resources for detailed designs. Some of their services may
include welding, fabrication, shearing, bending etc.

First Tier Suppliers: These companies provide major systems directly to assemblers. These
companies have global coverage, in order to follow their customers to various locations
around the world. They design and innovate in order to provide “black-box” solutions for the
requirements of their customers. Black-box solutions are solutions created by suppliers using
their own technology to meet the performance and interface requirements set by assemblers.

First tier suppliers are responsible not only for the assembly of parts into complete units like
dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of second-
tier suppliers.

Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After

researching consumers’ wants and needs, automakers begin designing models which are
tailored to consumers’ demands. The design process normally takes five years. These
companies have manufacturing units where engines are manufactured and parts supplied by
first tier suppliers and second tier suppliers are assembled. Automakers are the key to the
supply chain of the automotive industry. Examples of these companies are Tata Motors,
Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main
focus of these companies.
Dealers: Once the vehicles are ready they are shipped to the regional branch and from there,
to the authorised dealers of the companies. The dealers then sell the vehicles to the end
customers.

Parts and Accessory: These companies provide products like tires, windshields, and air bags
etc. to automakers and dealers or directly to customers.

Service Providers: Some of the services to the customers include servicing of vehicles,
repairing parts, or financing of vehicles. Many dealers provide these services but, customers
can also choose to go to independent service providers.

Emission norms:
In tune with international standards to reduce vehicular
pollution, the central government unveiled the standards
titled 'India 2000' in 2000 with later upgraded guidelines
as 'Bharat Stage'. These standards are quite similar to the
more stringent European standards and have been
traditionally implemented in a phased manner, with the
latest upgrade getting implemented in 13 cities and later,
in the rest of the nation. Delhi(NCR), Mumbai, Kolkata,
Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune,
Surat, Kanpur, Lucknow, Solapur, and Agra are the 13
cities where Bharat Stage IV has been imposed while the
rest of the nation is still under Bharat Stage III.

Exports:
ndia's automobile exports have grown consistently and reached $4.5 billion in 2009, with
United Kingdom being India's largest export market followed by Italy, Germany, Netherlands
and South Africa. India's automobile exports are expected to cross $12 billion by 2014.

According to New York Times, India's strong engineering base and expertise in the
manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing
facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen
and Suzuki.

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to
export 250,000 vehicles manufactured in its India plant by 2011. Similarly, General Motors
announced its plans to export about 50,000 cars manufactured in India by 2011.
In September 2009, Ford Motors announced its plans to setup a plant in India with an annual
capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the
Indian market and for export. The company said that the plant was a part of its plan to make
India the hub for its global production business. Fiat Motors also announced that it would
source more than US$1 billion worth auto components from India.

In July 2010, The Economic Times reported that PSA Peugeot Citroen was planning to re-
enter the Indian market and open a production plant in Andhra Pradesh with an annual
capacity of 100,000 vehicles, investing EUR 700M in the operation PSA's intention to utilise
this production facility for export purposes however remains unclear as of December 2010.

A Tata Safari on display in Poznan, Poland.

In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of cars after
Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by allowing foreign carmakers 100%
ownership of factories in India, which China does not allow.

In recent years, India has emerged as a leading center for the manufacture of small cars.
Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually
from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures
small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its
new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African
markets, and is in preparation to launch electric vehicles in Europe in 2010. The firm is also
planning to launch an electric version of its low-cost car Nano in Europe and the U.S.
Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in
the U.S. market. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive
India, which will market the product worldwide. Renault Nissan may also join domestic
commercial vehicle manufacturer Ashok Leyland in another small car project While the
possibilities are impressive, there are challenges that could thwart future growth of the Indian
automobile industry. Since the demand for automobiles in recent years is directly linked to
overall economic expansion and rising personal incomes, industry growth will slow if the
economy weakens.