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History of the Indian Automobile Industry

A Brief History of the Automobile Industry in India

 

The Indian automobile industry is one of the biggest markets in the world, both in terms of usages of vehicles and production of the vehicles. Speaking of the historical roots of the automobile market in India, the first time a vehicle entered the road was in 1897.

Until 1930, India had no manufacturing facilities and automobiles were imported directly from other countries. The historical decade in the manufacturing process was that of the 1940s, in which Indian companies such as Hindustan Motors and Premier began manufacturing cars from other firms.

The first car launched in the Indian market after 1940. During the same decade, Mahindra & Mahindra also began to produce utility vehicles.

Hindustan Motors is the first automobile company in India.

A brief history of the Indian auto industry

Shortly after independence in 1947, the government of India tried to create an automotive component manufacturing industry to complement the car fraternity. From 1960 to the 1980s, the Indian market was dominated by Hindustan Motors, which accumulated a large amount of participation due to its Ambassador model.

However, from 1950 to 1960, the industry grows at a slow rate due to the trade restrictions imposed on imports. Shortly after this repressive phase, demand increased, but to a lesser extent, what was observed mainly in the segment of tractors and commercial vehicles.

It was in the 1980s that the two firms, Hindustan Motors and Premier, were challenged by a new participant, Maruti Udyog Limited. Shortly after the liberalization period, carmakers who were previously not allowed to invest in the Indian market due to strict policies arrived in the country.

Post liberalization, the alliance between Maruti and Suzuki was the first joint venture between an Indian and a foreign company. Slowly and steadily, economic reforms brought the entry of major foreign companies such as Hyundai and Honda, which expanded their bases to the country.

From 2000 to 2010, almost all major automotive companies expanded their presence in India by establishing manufacturing facilities in different parts of the country.

As the manufacturing process in the early 2000s gained strength, car exports were quite slow in that period. Maruti Suzuki was among the best selling car brands and that began sending vehicles to the main European markets.

During the same decade, the government of India introduced mandatory emission standards to reduce the pollution produced by vehicles. The updated guidelines were known as ‘Bharat Stage’ and came into force in the main cities since these standards were based on strict European standards.

Currently, Bharat Stage IV is implemented in 13 cities including Delhi (NCR), Mumbai, Calcutta, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra while the rest of the nation is still under Bharat Stage III.

Over the years, the automotive market in India has evolved by leaps and bounds, as almost all large companies are present in the country. India has now become a center for car manufacturers to install their plants to manufacture vehicles destined for national and international markets.

The three prominent regions in which most of the Indian car industry is a concentrated area in the south, west, and north. In the southern region, Chennai is the vehicle manufacturing center, while the Mumbai and Pune belt ranks second. For the north, the NCR has a fair share in the concentration of production facilities.

To list some commendable feats of the Indian auto industry, it emerged as the fourth largest exporter of passenger cars behind Japan, South Korea, and Thailand in 2009. While in 2010, India emulated its performance from the previous year to become the third-largest car exporter.

Facts of India auto industry

  • The 2 wheeler contributes to 79.17% of the total automotive production in the country.
  • Constant growth in demand due to the steady increase in income, the middle class, and a young population
  • The Government of India takes initiatives to establish manufacturing plants through Make in India
  • India has a large pool of skilled labor and a growing technological base
  • It has the 12th largest population in the world with a growth rate of 20.8%, which increases the demand for luxury cars.
  • By 2020, India’s participation in the global passenger vehicle market is expected to reach 8% of the current 2.4% registered in 2015.

Automobile and economic growth

The evolution of the automotive industry contributed a lot to the economic growth of the country. He also helped the finance and insurance sectors. Over time, vehicle insurance was established and governed by the Motor Vehicles Act of 1988. It announced mandatory insurance for vehicles driven on Indian roads.

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