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Business opportunities in India

The Indian Auto component industry, currently estimated at US $63 billion industry, is expected to "triple" in less than eight years time to US $17 billion by 2012.The Indian auto industry with a turnover of US $ 12 billion and the auto parts industry with a turnover of US$ 3 billion offer scope for FDI

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100% FDI is allowed in this sector through automatic rout. There is no restriction on foreign direct investment in automobile sector.

The automobile sector of India is the seventh largest in the world. In a year, the country manufactures about 2.6 million cars making up an identifiable chunk in the world’s annual production of about 73 million cars in a year. The country is the largest manufacturer of motorcycles and the fifth largest producer of commercial vehicles. Industry experts have visualized an unbelievably huge increase in these figures over the immediate future. The figures published by the Asia Economic Institute indicate that the Indian automobile sector is set to emerge as the global leader by 2012. In the year 2009, India rose to be the fourth largest exporter of automobiles following Japan, South Korea and Thailand. Experts state that in the year 2050, India will top the car volumes of all the nations of the world with about 611 million cars running on its roads.

EXPORT

India has emerged as one of the world's largest manufacturers of small cars.

• 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.

• In 2009 India surpassed China as Asia's fourth largest exporter of cars.

FDI IN AUTOMOBILE

• The automobile industry in India is growing by 18 percent per year. The automobile sector in India was opened up to foreign investments in the year 1991.

• 100% Foreign Direct Investment (FDI) is allowed in the automobile industry in India.

• The production level of the automobile sector has increased from 2 million in 1991 to 9.7 million in 2006 after the participation of global players in the sector.

• Import of components is allowed without any restrictions and also encouraged.

EFFECT OF AUTOMOBILE INDUSTRY IN BSE

The industry has emerged as a key contributor to the Indian economy.

• Its has an annual contribution of 4% to the GDP and also accounting for about 5% of the total industrial output, this segment clearly stands out as a significant contributor to the economic growth.

AUTOMOTIVE MISSION PLAN 2016

• PM RELEASED AUTOMOBILE PLAN 2006 – 2016 TO GIVE A ROAD MAP TO INDIAN AUTOMOBILE INDUSTRY.

• INCREASE TURNOVER TO $145 BILLION BY 2016.

• INCREASE EXPORT REVENUE TO $35 BILLION BY 2016.

• PROVIDE EMPLOYMENT TO ADDITIONAL 25 MILLION PEOPLE BY 2016.

• BY 2016, AUTO SECTOR IS EXPECTED TO CONTRIBUTE 10% OF THE COUNTRY’S GDP & 30-35% OF THE INDUSTRY.

http://siadipp.nic.in/publicat/newsannual/2009/chapter6.2.vi.pdf

Cumulative FDI inflows during January 2000-2009 (up to December 2009) is Rs. 472,231.23 crores (US$ 105.99 billion). Out of this, the amount of FDI inflows in the Automobile Industry during January 2000 to December 2009 is Rs. 20,554.56 crores (US$ 4.55 billion) which 4.29% of the total FDI inflows.

During the period from January 2000 to December 2009, cumulative FDI inflows received from FIPB/SIA, acquisition of existing shares & RBI’s automatic routes only. However, this amount does not include FDI inflows received through acquisition route prior to January 2000. Further, the FDI inflows data on Country specific in respect of Automobile Industry is available only for the period January 2000 to December 2009. The amount of FDI inflows project specific in respect of all Countries & Sector are not centrally maintained prior to January 2000.

A.1. SUB SECTORS OF FDI INFLOWS IN AUTOMOBILE INDUSTRY: (from January 2000 to December 2009): S.No.

Sub Sectors

Amount of FDI inflows

%age with total FDI inflows in Automobile Industry

Rupees in
crores

US $ in
million

1.

Automobile industry

6,651.65

1,441.17

1.36

2.

Auto Ancillaries/Parts

8,823.97

1,965.54

1.85

3.

Passenger Cars

2,891.56

647.11

0.61

4.

Others (Transport)

2,187.38

492.69

0.46

Total of above

20,554.56

4,546.51

4.28



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