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Seminar by Dr.Jatinder Singh

A Seminar on “Internationalization of the Indian Car Industry: Some Insights” was held at the Governing Body Room, CDS on Friday 12 April 2019. The seminar was presented by Dr Jatinder Singh, Assistant Professor, CRRID, Chandigarh.

Abstract: The development journey of India’s passenger car industry is, in many ways, unique. The industry was stringently regulated as compared to other industries before the 1980s in various respects. Even within the automobile sector, this segment was treated differently for nearly three decades on passenger cars being considered a luxury item. The car industry witnessed sluggish growth and was branded as technologically stagnant industry till the entry of Maruti Udyog Limited in the early 1980s. With minimal changes, manufacturers in India continued to supply the same models of the car till the early 1980s which they received from international firms through technical collaboration during 1950s.

The situation changed completely with the onset of policy changes initiated in the 1980s and implemented at a large scale in the early years of 1990s. New policy regime marked a paradigm shift in the economy’s development strategy in general and the regulations involved around the car industry in particular. It provided a new setting for the industrial sector to grow that also eased the entry and operations of foreign firms. Resultant continuous entry of leading car manufacturers has not only increased the supply of technologically advanced cars but also increased the variety of cars as it gets manifested in terms of growing segmentation in the industry which was not existing till the early years of the 1990s but has become very stark since the late 1990s. Besides this transformation, the industry has been recording consistent high growth since the mid-1980s and significantly increased the forward and backward linkages. The impressive growth record of this industry, besides other things, has made it one of the most attractive sectors for foreign investors.

With the change in policy environment, resultant increase in foreign presence and associated strong growth, advocates of liberalisation presented India’s passenger car industry as one of the examples pointing to the success of liberalisation. They also claim that during the last decade and a half the passenger car industry also performed remarkably well in terms of technology development and exports, thereby realising two goals that remained unmet during the earlier regime. Studies have argued that technology standards of passenger car firms have improved remarkably and cars manufactured in India are comparable to the ones manufactured in advanced countries.
In this context, an attempt has been made to critically understand the development trajectory of the industry by analyzing various sources of growth and technological advancement. Further, the trade performance of passenger car firms and their contribution to the Balance of Payment is also analyzed in detail. To understand this, a variety of indicators related to growth, technology advancement and export performance have been studied in detail for the period for 1981-82 to 2013-14. During this period, the chosen industry has recorded a series of policy changes which has long last impact on the development trajectory of the industry.