Indian Car Industry

It would not be far-fetched by any stretch of the imagination if one was to say that the passenger car industry has been the de facto poster boy of India’s reform story. An industry that up until the 1980s had been heavily regulated, underwent delicensing, was categorised as a high priority sector and thrown open for the global players to enter. Suddenly, as the narrative goes, after years of an uncompetitive, oligopolistic decay, there was renewed dynamism within the segment. Sixteen new joint ventures were set up and different varieties of passenger cars flooded the market (GoI 2002), catering to the aspirations of a bourgeoning middle class. Large, modern plants boasting of the latest technological wherewithal were set up and there was the promise of new job creation that would be both skilled and rewarding.

Twenty-eight years down the line, the industry retains its much favoured position both in policy discourse and mainstream academic writing. As per the website of the government’s flagship programme, “Make in India,” the automotive sector is seen as one of the six “superstar” sectors, particularly the passenger car segment whose market is expected to triple to 9.4 million units by 2026.¹ The Second Automotive Mission Plan 2016–26 similarly identifies the industry as a major employment generator, foreign direct investment (FDI) earner and gross domestic product (GDP) contributor. Academic writings such as those of Gulyani (2001) and D’Costa (2005) highlight the continuous high growth trends that the industry has been witness to and its remarkable performance both in terms of technological development (Sagar and Chandra 2004; Kale 2012) and exports (Narayanan 2006). These are provided as definitive proofs of the resounding success of the reform programme.