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Determinants of Competitiveness of the Indian Auto Industry

Author

Listed:
  • Badri Narayanan G

    (Indian Council for Research on International Economic Relations)

  • Pankaj Vashisht

    (Indian Council for Research on International Economic Relations)

Abstract

This paper analyses the determinants of competitiveness of auto industry in India, based on a field survey and a quantitative analysis of secondary data. It highlights that all segments of Indian auto sector are growing at a fairly high rates and their productivity as well as export intensity is on the rise. Domestic sales are rising, but they have declined in certain sub-segments of vehicles. However, the R&D expenditure has been scarce. Effective rate of protection of automobile assembly is far higher than that of auto-components manufacturing. Unorganised sector, which is quite significant in auto-component manufacturing, has grown more rapidly in the urban areas than in the rural areas. The econometric analysis suggests various measures that could be taken by the government, particularly, the credit facilitation for SMEs. A field survey comprising auto manufacturers in India underlines various constraints faced by the sector, such as the shortage of skilled manpower along with poor infrastructure, fluctuating steel prices and unavailability of land at reasonable price. This suggests that the government could facilitate the industry in becoming more competitive by taking steps such as structural fiscal reforms, cut in import duties of raw materials and capital goods, promotion of R&D and FDI, training facilities, research-backed negotiations of FTAs, roadmap for harmonising emission norms across the country and infrastructure improvement. Industry, on the other hand, should improve its R&D capabilities and market research.

Suggested Citation

  • Badri Narayanan G & Pankaj Vashisht, 2008. "Determinants of Competitiveness of the Indian Auto Industry," Indian Council for Research on International Economic Relations, New Delhi Working Papers 201, Indian Council for Research on International Economic Relations, New Delhi, India.
    • Handle: RePEc:ind:icrier:201
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    References listed on IDEAS

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    1. Narayanan, K., 1998. "Technology acquisition, de-regulation and competitiveness: a study of Indian automobile industry," Research Policy, Elsevier, vol. 27(2), pages 215-228, June.
    2. Deb Kusum Das, 2003. "Quantifing trade barriers: Has protection declined substantially in Indian manufacturing?," Indian Council for Research on International Economic Relations, New Delhi Working Papers 105, Indian Council for Research on International Economic Relations, New Delhi, India.
    3. W. M. Corden, 1966. "The Structure of a Tariff System and the Effective Protective Rate," Journal of Political Economy, University of Chicago Press, vol. 74, pages 221-221.
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    Cited by:

    1. Narayanan, Badri G. & Hertel, Thomas W. & Horridge, J. Mark, 2010. "Disaggregated data and trade policy analysis: The value of linking partial and general equilibrium models," Economic Modelling, Elsevier, vol. 27(3), pages 755-766, May.
    2. Madhuri Saripalle, 2013. "R and D Spillovers Across the Supply Chain: Evidence from the Indian Automobile Industry," Working Papers 2013-083, Madras School of Economics,Chennai,India.
    3. Jha, Praveen K. & Kumar, Dinesh, 2021. "India's participation in global value chains and some implications for economic and social upgrading: A case study of the automobile sector," IPE Working Papers 156/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Jaya Prakash Pradhan & Neelam Singh, 2009. "Outward FDI and Knowledge Flows: A Study of the Indian Automotive Sector," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 1(1), pages 156-187, June.
    5. Tom Barnes, 2017. "Industry policy in Asia’s demographic giants: China, India and Indonesia compared," The Economic and Labour Relations Review, , vol. 28(2), pages 218-233, June.
    6. Narayana, Badri G. & Hertel, Thomas W. & Horridge, J. Mark, 2010. "Linking Partial and General Equilibrium Models: A GTAP Application Using TASTE," Technical Papers 283427, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Saranga, Haritha & Schotter, Andreas P.J. & Mudambi, Ram, 2019. "The double helix effect: Catch-up and local-foreign co-evolution in the Indian and Chinese automotive industries," International Business Review, Elsevier, vol. 28(5), pages 1-1.
    8. Judit Nagy & Zsófia Jámbor, 2018. "Competitiveness In Global Trade: The Case Of The Automobile Industry," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 63(218), pages 61-84, July – Se.

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    More about this item

    Keywords

    Indian Auto Industry; Competitiveness; Efficiency and Indian Auto Policy;
    All these keywords.

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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