Indian Auto Industry: A Global Hub in the Making?

Abstract:

Developing countries are increasingly gaining prominence in global auto industry, which is one they key players in the global economy. India has one of the fastest growing auto industry even among them. This study addresses two important questions pertaining to this industry, both relating to the prospects of India becoming a global auto hub, using a quantitative approach: What characterizes India's export-import basket in auto sector? What is the role of India in global auto industry and how does it compare with other major players? Our analysis shows that India has been growing impressively in the global arena in the recent years, especially in auto-components, heavy trucks, cars and motorcycles. Still, its shares in world exports remain quite low. Tariffs on automobiles are much higher in India compared to other countries, but those on components are low. FTA with Thailand has resulted in net-gain for India, showing the potential benefits the industry can reap from free trade. More policy reforms by the government and R&D efforts by the industry are required to make India a global auto hub.