41.Automobiles

The automotive sector is one of the core industries of the Indian economy. The delicensing of the sector in 1991 and the subsequent opening up of 100 per cent foreign direct investment (FDI) through the automatic route marked the beginning of a new era for the Indian automotive industry. Since then almost all the global major automobile players have set up their facilities in India taking the level of production of vehicles from 2 million in 1991 to 10.83 million in 2007–08.

The growth of the Indian middle class with increasing purchasing power along with the strong growth of the economy over the past few years has attracted global major auto manufacturers to the Indian market. Moreover, India provides trained manpower at competitive costs making India a favoured global manufacturing hub. The attractiveness of the Indian markets on one hand combined with the stagnation of the auto sector in markets such as Europe, US and Japan on the other, have resulted in shifting of new capacities and flow of capital to the Indian auto industry.

Moreover, Indian car makers are earning acclaim worldwide. The home-grown automaker, Maruti Suzuki has emerged as the fourth most reputed among auto companies in the world, even ahead of its parent Suzuki Motor Co of Japan, according to the Global 200: The World's Best Corporate Reputations list, compiled by US-based Reputation Institute.

India with its rapidly growing middle class, market-oriented stable economy, availability of trained manpower at competitive cost, fairly well-developed credit and financing facilities and local availability of almost all the raw materials at a competitive cost has emerged as one of the favourite investment destinations for the automotive manufacturers.