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India Automobile Industry


Submitted By pnkj
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Technology and
Innovation Management


Influence of Government Policies on
Industry Development:
The Case of India’s Automotive Industry
Mahipat Ranawat
Rajnish Tiwari
March 2009
Working Paper No. 57

Hamburg University of Technology
Schwarzenbergstr. 95, D-21073 Hamburg, Germany
Tel.: +49 (0)40 42878-3777; Fax: +49 (0)40 42878-2867

Influence of Government Policies on Industry Development:
The Case of India’s Automotive Industry
By Mahipat Ranawat and Rajnish Tiwari
Hamburg University of Technology
Institute of Technology and Innovation Management
Schwarzenbergstr. 95, 21073 Hamburg (Germany)
Tel. +49 – (0)40 – 428 78 – 3776, Fax: +49 – (0)40 – 428 78 – 2867;;

The automotive industry in India has come a long way from its nascent state at the time of
India’s independence in 1947 to its present day dynamic form. As compared to the production of mere 4,000 vehicles in 1950, the production of the industry crossed the historic landmark of 10 million vehicles in 2006. Today, the industry produces a wide range of automobiles and auto-components catering to both the domestic as well as foreign markets. The development of the industry has been shaped by the demand on the one hand and the government interventions on the other; the influence of the latter being considerable.
The evolution of India’s automotive industry is identified to have occurred in four phases. In the first (1947-1965) and second phase (1966-1979), the important policies identified were related to protection, indigenisation and regulation of the industry. On the one hand, these policies helped India to build an indigenous automotive industry, while on the other it led to unsatisfactory industry performance. In the third phase (1980-1990), the

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