...WORKING PAPER Influence of Government Policies on Industry Development: The Case of India’s Automotive Industry Mahipat Ranawat Rajnish Tiwari March 2009 Working Paper No. 57 Hamburg University of Technology Schwarzenbergstr. 95, D-21073 Hamburg, Germany Tel.: +49 (0)40 42878-3777; Fax: +49 (0)40 42878-2867 www.tu-harburg.de/tim www.global-innovation.net Influence of Government Policies on Industry Development: The Case of India’s Automotive Industry By Mahipat Ranawat and Rajnish Tiwari Hamburg University of Technology Institute of Technology and Innovation Management Schwarzenbergstr. 95, 21073 Hamburg (Germany) Tel. +49 – (0)40 – 428 78 – 3776, Fax: +49 – (0)40 – 428 78 – 2867 mahipat.ranawat@tuhh.de; rajnish.tiwari@tuhh.de www.tuhh.de/tim; www.global-innovation.net Abstract The automotive industry in India has come a long way from its nascent state at the time of India’s independence in 1947 to its present day dynamic form. As compared to the production of mere 4,000 vehicles in 1950, the production of the industry crossed the historic landmark of 10 million vehicles in 2006. Today, the industry produces a wide range of automobiles and auto-components catering to both the domestic as well as foreign markets. The development of the industry has been shaped by the demand on the one hand and the government interventions on the other; the influence of the latter being considerable. The evolution of India’s automotive industry is identified to have occurred in four phases. In...
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...A BRIEF REPORT AUTO AND AUTO ANCILARIES IN INDIA March, 2012 1. OVERVIEW OF AUTO INDUSTRY 1.1 Current Status One of the major industrial sectors in India is the automobile sector. Subsequent to the liberalization, the automobile sector has been aptly described as the sunrise sector of the Indian economy as this sector has witnessed tremendous growth. Automobile Industry was delicensed in July 1991 with the announcement of the New Industrial Policy. The passenger car industry was, however, delicensed in 1993. No industrial licence is required for setting up of any unit for manufacture of automobiles except in some special cases. The norms for Foreign Investment and import of technology have also been progressively liberalized over the years for manufacture of vehicles including passenger cars in order to make this sector globally competitive. At present 100% Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. The import of technology/technological upgradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. With the gradual liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has grown progressively. The cumulative production of automobile for April-December 2011 registered a growth of 14.94 per cent over same period in 2010. Production in December...
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...Introduction: Automative industry in India, the sixth largest in the world, has produced more than 3.5 million vehicles in 2010 alone. The Indian automotive industry in mainly includes the industries associated with the manufacturing of two wheelers, three wheelers and four wheelers-such as cars and trucks. The major Indian players include Maruti, Mahindra and Mahindra, Tata Motors, Ashok Leyland, Bajaj Auto and TVS Motors. In 1990s and after, Indian automotive industry saw many foreign players establishing their manufacturing and assembly plants in India, catering to the Indian market. Major foreign players include Toyota, Hyundai, General Motors and Volkswagen Group. Major automotive hubs in India are Chennai, NCR and Pune. As the operations of automotive industry are increasing rapidly in terms of volume and complexity, companies in India need to follow global standards and best practices for achieving optimization of their supply chain. One of the practices, which are followed by leading companies, is fourth party logistics (4PL) company, or a lead logistics provider (LLP) Need for 4PL 1) Concept Definition: Lead Logistics provider or 4PL 4PL is term introduced by Accenture in 1996.It describes 4PL as an "integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design supply chain solutions". 4PL i.e fourth party logistics provider is a company which re-designs a manufacturer’s or retailer’s supply chain;...
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...11/5/13 Automotive supply chain likely to get affected, says study - The Economic Times You are here: ET Home › New s › New s By Industry › Auto › Auto Components Automotive supply chain likely to get affected, says study By PTI | 19 Sep, 2013, 06.15PM IST Post a Com m ent CHENNAI: The country's automotive supply chain is likely to get affected due to various factors, including escalation of costs to supply chain operations and shortage of professionals, a study has revealed. The study on "Building world-class automotive supply chains in India" was undertaken by industry body CII and ATKearney. The report was released during the conference on Auto Supply Chain Management 2013 that began here today. It said short and medium term volatility would continue, despite India set to become the world's third largest auto-manufacturer by the year 2020. Automotive supply chain likely to get affected, says study Escalating costs of supply chain operations would also have its impact in the supply chain industry as India's logistics costs are 30 per cent higher than those in China and other large automotive markets, it said. "As supply chain functions become more strategic, the industry is likely to face a major shortage of senior professionals in Supply Chain Management capabilities", it said. ET SPECIAL: Save precious time tracking your investments However, on a positive note, the study said the strong double-digit growth in the aftermarket, driven by more vehicles...
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...Looking at the economy of India, India is the Largest Democracy in the world with 1.2 billion people. It is 4th largest GDP (PPP) and 11th largest GDP (Nominal). India is 2nd fastest growing economy (Estimate 2011-12 – 9%) with India’s average growth rate 7.3% over past 10 years and expected to outpace China in next decade. India is 3rd largest investor base in the World. If we look at the demographics of People of India, It consists of 50 % under 25 years & 65% under 35 years. India also having the 2nd largest pool of certified professionals and highest number of qualified engineers in the world. If we look at sector wise distribution, India is having Services (52%), Manufacturing (27%) and Agricultural (21%) shares. Average Real GDP growth in last 5 year was 8.5% with GDP Per Capita at US $ 1018 and a projected GDP growth in 2011-12 is 9.0%. The Automotive Sector in India is one of the largest in the world and one of the fastest growing globally. It was 1897 when the first car rolled out on Indian roads. Until 1930 cars were imported from other countries. First Indian Automotive Company starts with Mahindra & Mahindra in 1940 when it was established by two brothers as a trading company in 1945, and begun assembly of Jeep CJ-3A utility vehicles under license from Willys. 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 with its growth,...
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...Tata Motors: Can it become a global contender in the automotive industry? Executive Summary The objective of this report is to provide an analysis of Tata Motors’ current strategies and a detailed inspection of the financial situation, the company’s strengths, weaknesses, opportunities and threats and the competitive nature of the car market in order to make a recommendation as to whether or not it is in Tata Motors best interests, to propel itself into the global automotive industry at this point in time. On close inspection there were three key issues identified. Firstly the financial condition of the company is analysed to determine the viability of an expansion into the global automotive industry. Secondly the safety issues & standards of the vehicles produced, particularly related to the Tata Nano need to be addressed, and thirdly the detailed market research to be undertaken by Tata Motors in relation to the competitive needs and expectations of the motoring public in countries Tata Motors is trying to move into eg. United States and Europe when it comes to passenger cars as well as ability to continue to effectively capture the Jaguar and Land Rover markets globally, along with their bus and truck range which are strong in India but not as strong in other countries. Economic conditions not only in India but globally are a consideration for Tata Motors. As of 2012 India was the 7th largest nation in area, the second most populous country on earth with...
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...basis of growth and development for most emerging nations of course other factors too are relevant). This research paper seeks to examine the international marketing strategies of MNEs in the automobile industry, specifically for the emerging nations, because as our subsequent findings will prove, that these markets are currently the most promising and will remain so at least for a few years to come. When we consider the emerging nations, the most promising ones are obviously the BRICs (reasons covered in the following sections). Hence, for readability and convenience purposes, we have limited our research to these nations. Keywords: Marketing strategy, BRIC, TRIAD, MNE, emerging markets, JV Objectives of Study: 1) International Marketing strategies followed by automotive companies in Emerging markets. 2) The study also aims at understanding whether the marketing strategy of these global automotive companies are justified by analysing its impact on the key statistically significant numbers of a company, i.e. the net profit, sales, operating income and the market share. Introduction MNEs continuously strive to grow, and they need better opportunities in doing so. The automobile industry has been proven to be one of the most promising and stable industries in the world. While the developed markets have reached...
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...R e se a rc h a n d Stat i s t i c s B r a n c h working paper 16/2009 Impact of the Global Economic and Financial Crisis over the Automotive Industry in Developing Countries UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION RESEARCH AND STATISTICS BRANCH WORKING PAPER 16/2009 Impact of the Global Economic and Financial Crisis over the Automotive Industry in Developing Countries Peter Wad Copenhagen Business School UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna, 2010 This paper was prepared by Peter Wad, UNIDO consultant and backstopped by Nobuya Haraguchi, UNIDO staff member, Research and Statistics Branch, Programme Coordination and Field Operations Division. Iguaraya Saavedra provided administrative support. The designations employed, descriptions and classifications of countries, and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. The views expressed in this paper do not necessarily reflect the views of the Secretariat of the UNIDO. The responsibility for opinions expressed rests solely with the authors, and publication does not constitute an endorsement by UNIDO. Although great care has...
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...2 Supplier | The Indian Automotive Supply Chain Context | | | | | Contents Introduction 4 A Brief History of Indian Auto Sector 4 The Present Scenario 5 Indian Automotive Industry Supply Chain 6 Characteristics of the Auto Supply Chain 8 Tiered Structure 8 Linkage of Suppliers and OEMs 9 Supplier Power – An Industry Level Analysis 10 Clustered Development 11 Financial Position of the Suppliers 12 Supply Chain Challenges in the Auto Industry 13 SM Auto Stamping Pvt. Ltd – An Introduction 13 Products Manufactured 14 Quality Systems 14 Manufacturing Process 15 Challenges and Opportunities 15 Scheduling and Production 15 Variety and Performance 17 Procurement 18 Pricing and Costing 19 Cyclical Nature of the Industry 20 Solutions 20 Data Analysis 21 Conclusion - Creating a Win-Win Strategy 23 References 25 Appendix I 26 List of Figures Figure 1 – Automobile Market in India 6 Figure 2 – Global growth of the automobile market 7 Figure 3 – Turnover contribution of different components 7 Figure 4 – Automobile supply chain 9 Figure 5 – Automobile and auto component industry growth rates 10 Figure 6 – Strategic analysis of supplier industry 11 Figure 7 – Suppliers in India 12 Figure 8 – Margin trends 12 Figure 9 – Manufacturing flow process for SM Auto 15 Figure 10 – Scheduling Plan 16 Figure 11 – Various manufactured components 17 Figure 12 – Suppliers in India 19 Figure 13 – Demand and...
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...consists of the following 30 major Indian companies as of 17 February 2012. # | Company | Industry | 1 | Housing Development Finance Corporation | Consumer finance | 2 | Cipla | Pharmaceuticals | 3 | Bharat Heavy Electricals | Electrical equipments | 4 | State Bank Of India | Banking | 5 | HDFC Bank | Banking | 6 | Hero Motocorp | Automotive | 7 | Infosys | Information Technology | 8 | Oil and Natural Gas Corporation | Oil and gas | 9 | Reliance Industries | Oil and gas | 10 | Tata Power | Power | 11 | Hindalco Industries | Metals and Mining | 12 | Tata Steel | Steel | 13 | Larsen & Toubro | Conglomerate | 14 | Mahindra & Mahindra | Automotive | 15 | Tata Motors | Automotive | 16 | Hindustan Unilever | Consumer goods | 17 | ITC | Conglomerate | 18 | Sterlite Industries | Metals and Mining | 19 | Wipro | Information Technology | 20 | Sun Pharmaceutical | Pharmaceuticals | 21 | GAIL | Oil and gas | 22 | ICICI Bank | Banking | 23 | Jindal Steel & Power | Steel and power | 24 | Bharti Airtel | Telecommunication | 25 | Maruti Suzuki | Automotive | 26 | Tata Consultancy Services | Information Technology | 27 | NTPC | Power | 28 | DLF | Real estate | 29 | Bajaj Auto | Automotive | 30 | Coal India | Metals and Mining | AAftekAmbuja Cements LimitedAptechArchies LtdArvind MillsAsian PaintsAventis PharmaBBEMLBerger Paints India LtdBharat Electronics LimitedBharat ForgeBharat Heavy Electricals LimitedBharat PetroleumBombay...
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...traditional automotive industry regions Peter Wells Cardiff Business School, Cardiff University, Aberconway Building, Colum Drive CF10 3EU, UK, wellspe@cardiff.ac.uk Received on June 30, 2009; accepted on March 4, 2010 Downloaded from cjres.oxfordjournals.org at East China Normal University on May 24, 2011 This paper provides a case study of the Tata Nano, a low-price car designed primarily in and for the Indian market, and its implications for the developed industrial markets. While the Nano is a classic ‘disruptive’ innovation in an Indian context, this paper argues that the car and its emulators have the potential to undermine the viability of the European automotive industry whose business is premised on technological sophistication, premium branding and high price. In an era of greater austerity, the ‘value for money’ segment is the one with global growth potential in emergent markets as well. The paper concludes that policy makers in Europe will need to decide how to react to the rather different vision of automobility offered by the Nano. Keywords: Tata Nano, automotive industry, strategy, regional development, economic policy, price competition JEL Classifications: F01, L11, L52, L62 Introduction In March 2009, the Indian company Tata launched the long-awaited Nano model, intended to provide a low-cost entry to automobility as an alternative to the motorbike and hence become a ‘peoples car’ for the emerging markets. While initially planned for India, the underlying...
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...INDIAN AUTO COMPONENT INDUSTRY AN OVERVIEW 1 Contents 1 2 3 4 5 6 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 7 2 Introduction Automotive Component Manufacturers Association of India Role An apex agency of the Indian Automotive Industry auto component output in the organized sector 600+ companies forming majority of the Members Quality System ACMA operates on Quality System based on ISO 9001:2000 As Automotive Component Manufacturers Association of India in the year 1982 Re-Christened Inception In the year 1959 as The All India Automobile & Ancillary Industries Association (AIA & AIA) 3 ACMA and Its Services Promotes Indian Automotive Component Industry Trade Promotion Technology Up-gradation Quality Enhancement Collection & Dissemination of Information Vital Catalyst for Industrial Development 4 International Business Development Promote India Promote India as a Brand as a Brand Organize Business Organize Business Development Delegation Development Delegation Overseas Overseas Undertake Export Undertake Export Promotional Promotional Projects Projects Organize Participation Organize Participation in Overseas in Overseas Automobile Automobile Exhibitions & Fairs Exhibitions & Fairs Global Interaction Global Interaction through through Counterpart Association Counterpart Association ...
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...Auto Component Industry in India: Growing Capabilities & Strengths Agenda • India: A Vibrant Economy • Automotive Industry in India • Auto Component Industry in India • Policy Environment • Capabilities & Challenges • The Way Forward • About ACMA 2 India: A Vibrant Economy 3 India: A Vibrant Economy 1. Largest Democracy – 1.2 billion people, Growing Middle Class 2. 4th largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion) 3. One of the fastest growing economies • • India’s average GDP growth rate: 8.4% over past 5 years Expected to outpace China in the next decade 4. 3rd Largest Investor base in the World 5. Robust Legal and Banking Infrastructure 6. Demographics Advantage – Youth driven economy 7. Suburbanization & Rural to Urban Migration – 140 million by 2020; 700 million by 2050 8. 2nd largest pool of Certified Professionals and highest number of Qualified Engineers in the world 9. Investment in Infrastructure 4 Automotive Industry in India 5 Automotive Clusters in India Eicher Escorts Hero Moto Corp Honda Motorcycle Honda SIELCars ICML JCB Maruti Suzuki New Holland Mahindra Suzuki Motorcycles Swaraj Mazda Tata Motors Yamaha North *New Hub: Sanand Tata Motors, Maruti, Ford India, Hindustan Motors Tata Motors East West Bajaj Auto Fiat Force Motors GM John Deere Mahindra Mahindra Navistar Man Force Mercedes Benz PSA Skoda Tata Hitachi Tata Motors Volkswagen Volvo Eicher Ashok Leyland BMW Caterpillar South Daimler...
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...INDIAN AUTOMOBILE INDUSTRY The automobile industry is one of the core industries in Indian economy, whose prospect is reflective of the economic resilience of the country. With the Liberalization of the economy, India had become the playground of major global automobile majors. The automobile industry in India is gradually evolving to replicate those of the developed countries. The report focuses on the trends that are emerging in the Industry across segments, namely, passenger cars/multi-utility vehicle, commercial vehicles, two wheelers and Tractors. The qualitative analysis of the various trends reveals that industry offers immense scope even for allied industries and those looking at investing in the automobile Industry. Indian automotive industry has become more competitive in the export market due to its Technological and quality advances, so much so that in quality conscious market as such as Europe and America, Indian automotive industry is emerging as a major player judging by its performance. India today exports engine and Engine parts, Electrical parts, Drive transmission and steering parts, Suspension and braking parts among others. Automobile industry in India is still in its infancy but growing rapidly. The opportunities in the automobile industry in India are attracting big names with big purse and they are investing vigorously in infrastructure, design and development and Marketing. Automobile industry in India is today poised for the big leap. It...
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...chapter- 1 INDUSTRY PROFILE 1.1 Automotive Industry The automotive industry designs, develops, manufactures, markets and sells the world motor vehicles. In 2008, more than 70 million motor vehicles, including cars and commercial vehicles were produced worldwide. In 2007, a total of 71.9 million new automobile were sold worldwide. Around the word, there were about 806 million cars and light trucks on the road in 2007: the burn over 260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly especially in India and china. 1.2 India An embryonic automotive industry started in India in the 1940s. However for the next 50 years the growth of the industry was hobbled by the socialist policies and the bureaucratic hurdles of the license. Following, the economic liberalization in India from 1991 and the gradual easing of restrictions on industry, India has seen dynamic 17% annual growth in automobile production and 30% annual growth in export of automotive components and automobiles. India produces around 2 million automobiles currently. Total turnover of the Indian automobile industry is expected to grow from USF 34 billion in 2006 to 122 billion in 2016. Tata Motors has launched Tata Nano, the cheapest car in d world at USD 2200. Indian automotive industry is contributing a significant portion to overall Indians GDP. This sector is growing and promising a lucrative future. Automotive sector also provides wide business and employment opportunities...
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