The Indian Passenger Car Industry and the South Asian Market: Global Auto Companies’ Struggles in India

Abstract

The 1991 liberalization opened up many sectors of the Indian economy to global capital flows, and its auto industry has attracted the bulk of foreign investment after it was deregulated in 1993. Ten of the world’s leading auto companies have set up production facilities for passenger cars in India since deregulation. Over the past decade the Indian passenger car industry has witnessed a substantial increase in production, a wave of new models, and the inflows of global components suppliers. The decline of local companies was anticipated, and, indeed, some have seen their market shares shrink drastically in the past decade. The combined effects of these changes have led to a fundamental and extensive restructuring of the Indian passenger car industry, of which previous restructuring dates back to the early 1980s when Maruti Udyog, a joint venture of the Indian government and the Suzuki Motor Company, emerged as a dominant player in the market.