Executive summary
India is a developing country with an emerging automobile sector that grew rapidly over the past few years. It has become Eleventh largest passenger car producer. India is the largest democracy in the world. Recently Indian Government also came up with their ‘Auto Policy’ and the vision of this policy is “To establish a globally competitive automotive industry in India and to double its contribution to the economy by 2010.” The Indian automotive industry has already attained a turnover of Rs.1, 65,000 crore ($34 billion USD). The contribution of the automotive industry to GDP has risen from 2.77% in 1992- 93 to 5% in 2005-06. The auto companies have a manufacturing capacity of over 95 vehicles per annum. Foreign investors have found this stable economy very favorable for their investments into the country. India’s GDP real growth rate is 9.2% (2006 EST.). The country's advantage in affordable and quality cars has let the economy to increase their international sales which stimulated the economy to boost up again in recent years. We analyze from the data that the FDI inflow is much higher in to India rather than the out flow. It is the 50th position in world competitiveness ranking. Its high level of well-educated workers, who constitute a formidable brain trust for future research and development, are its major asset. The raw materials and auto parts required by automobile production are widely available in India. The knowledge and information oriented automobile industries here are attracting foreign automobile investors as they are suitable for developing sophisticated activities. The rapid advancement in the automobile industry in developed countries has boosted up the demand for locally produced multipurpose cars and made the ...