With large-scale investments planned by domestic and foreign companies, India's automobile industry is set to witness a major boom.

In its annual World Investment Report released globally, United Nations Conference on Trade and Development (UNCTAD) said: "Production of motor vehicles by India’s automotive industry reached 1.7 million vehicles in 2005/06. Suzuki Motor (Japan) was the leading investor in India in this industry, ranking first in market share, followed by the domestic firm Tata Motors and then Hyundai Motor (Republic of Korea) (box figure II.4.1)."

Other significant foreign players in India’s automotive industry include Toyota Motor (Japan), Honda Motor (Japan), General Motors (United States) and Ford Motor (United States). Driven by market-seeking motives, these carmanufacturing TNCs have started or are planning large-scale investment projects in India. Accordingly, the landscape of the country’s automotive industry is likely to witness a dramatic change in the next few years.

To strengthen its leading position, Suzuki Motor has announced an expansion plan of $1.65 billion, which will help to increase its annual production capacity to a million vehicles by 2010.

General Motors is investing $300 million in a car assembly plant in Maharashtra. The plant will start production in the fourth quarter of 2008, producing 100,000 compact cars annually. The capacity of General Motors' factory in neighbouring Gujarat is also being expanded.

Cooperating with Mahindra & Mahindra, an Indian jeep and tractor producer, Nissan (Japan) and Renault (France) are planning to invest $908 million in a carassembly plant in Chennai. With an annual capacity of 400,000 vehicles, the plant will start production in 2009.

In order to double its market share to 10% in four or five years, Toyota Motor is preparing to invest $500 million in quadrupling the capacity of its plant in Bangalore (from 50,000 vehicles in 2006 to 200,000 by 2010).

Market shares of automobile producers in India, 2005/06 have been presented in the report, based on data from the Automotive Component Manufacturers Association of India.

Mr. Neeraj Sharma

Neeraj Electronics

CEO, Neeraj Electronics
Jorhat, India

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