INDIAN AUTOMOBILE INDUSTRY

NORTH SOUTH UNIVERSITY

Group members:
Name Hasnaeen Md. Sharfuddin MuntasirMamunChowdhury Md. SabiqueMohtadi Md. Shah Ahsan ID 1010665030 1010471030 1010737030 1010762030

Authorizer:
MehreeIqbal (MeI) Faculty, School of Business North South University

Date of Submission:
10th August 2012

NORTH SOUTH UNIVERSITY Letter of Transmittal

10th August 2012 MehreeIqbal Lecturer, School of business, North South University

Dear Miss, In this report of Indian Automobile Industry, we have tried to implement our learning from this course. We would like to thank you for offering the opportunity to work on this topic. Despite many limitations, we have tried our best to make this report accurate and reliable. If you have any further enquiry concerning any additional information, we would be very pleased to clarify that. This report also includes the key components and their brief discussion related with this subject that you have mentioned earlier.

Yours sincerely, Students of Sec-12 MGT (372)

Acknowledgement:
The most pleasant part of submitting the report is to get the opportunity. We would like to thank those who have contributed to it a lot. Unfortunately, the list of expression of thanks- no matter how extensive is always incomplete and inadequate. These acknowledgements are no exception.

Our first thank goes to the almighty Allah for bestowing us the patience and courage to finish this huge task within its deadline.

Thanks must go to the team members, whose unflagging patience and astounding capacity for creative work, and long hours made the report both possible and successful under the pressure of knocking deadline.

In addition, thanks to those who has given us important and valuable advises about our report.

At last, we sincerely acknowledge our debt toMehreeIqbal (MeI), our honorable faculty, for his valuable counseling towards the improvement of the report. Without his encouragement, this would have never been possible.

CONTENT Executive summary 1. Introduction 2 Pest analysis 2.1. Political Analysis 2.1.1. System of government 2.1.2. Government policies FDI policy Export policy 2.1.3. Political stability 2.2. Economic analysis 2.2.1. Economic indicators GDP growth FDI inflow and outflow Position of the country 2.3. Social/culture analysis 2.3.1. Language 2.3.2.Religion 2.3.3 Education 2.3.4 Social Strata. 2.4Technological Anaysis 2.4.1. Infrastructure

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7 8 8 8 9 9 12 14 15 15 15 16 17 24 24 24 24 25 26 27 27
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3 Analysis of national competitiveness using Porters model 3.1. Factor endowment 3.2. Demand condition 3.3. Related And Supporting industries 3.4. Firm strategy, structure, rivalry 4. SWOT Analysis (Table) 5. Decision 5.1. Appropriate entry mode 6. Recommendation 7. Conclusion

32 34 35 35 36 37

Executive summary:
The automotive industry in India has come a long way from its nascent state at the time of Indias 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. In present days the automobile industry, one of the core sectors, has undergone metamorphosis with the advent of new business and manufacturing practices in the light of liberalization and globalization. The sector seems to be optimistic of posting strong sales in the couple of years in the view of a reasonable surge in demand. The Indian automobile market is gearing towards international standards to meet the needs of the global automobile giants and become a global hub. A detailed analysis of Automobile industry has been covered in respect of past growth and performance. Under this project to better understand the Industry we have used Fundamental and Technical tools to make it more authentic n meaningful. An E.I.C approach has been followed under Fundamental Analysis which covered effect of Recession, the impact of inflation, FDIs, Export, GDP etc. on Automobile Industry. The Industry Analysis has been done with PEST analysis, Porters model analysis, SWOT analysis. At the end conclusion and recommendations have been specified so as to make the research work more meaningful and purposeful.

1. Introduction:
The Indian Automobile Industry manufactures over 11 million vehicles and exports about 1.5 million each year.The dominant products of the industry are two-wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three-wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has a turnover of more than USD $35 billion and provides direct and indirect employment to over 13 million people. The supply chain is similar to the supply chain of the automotive industry in Europe and America. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. With a high cost of developing production facilities, limited accessibility to new technology, and increasing competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. And this is the reason for choosing this industry. Here in this report we have analyzed the political condition of India as a business investment sector, FDI trend and Indian FDI policy, political stability and economic condition of India. we have analyzed Indian automobile sector under porters model and pointed out the strength, weakness, opportunity and threat of this industry in India. Lastly we gave recommendation for investing in India regarding in this business.

2. PEST analysis:
2.1. Political analysis:
2.1.1. System of government policies:
India has a parliamentary form of government based on universal adult franchise. The executive authority is responsible to the elected representatives of the people in the Parliament for all its decisions and actions. Sovereignty rests ultimately with the people. The Parliament is bi-cameral. Rajya Sabha (Council of States): The Council of States consists of not more than 250 members, of whom 12 are nominated by the President of India and the rest elected. It is not subject to dissolution, one-third of its members retiring at the end of every second year. The elections to the Council are indirect. The allotted quotas of representatives of each State are elected by the members of the Legislative Assembly of that State, in accordance with the system of proportional representation by means of a single transferable vote. The nominated members are persons with special knowledge or practical experience in literature, science, art and social service. The Rajya Sabha is presided over by the Vice- President of India. Lok Sabha (House of the People): The House of the People consists of 545 members. Of these, 530 are directly elected from the 25 States and 13 from the seven Union Territories. Two members are nominated by the President to represent the Anglo-Indian community. Unless dissolved sooner, the term of the House is five years from the date appointed for its first meeting. The Lok Sabha elects its own presiding officer, the Speaker. The Executive: The President of India is the Head of the State and the Commander-in-Chief of the Armed Forces. He is elected by an electoral college composed of members of both the Houses of Parliament (Rajya Sabha and Lok Sabha) and the legislatures of the nations constituent States. The President holds office for five years and can be re-elected. The President does not normally exercise any constitutional powers on his own initiative. These are exercised by the Council of Ministers, headed by the Prime Minister, which is responsible to the elected Parliament. The Vice-President is elected jointly by the members of both the Houses of Parliament. The person enjoying majority support in the Lok Sabha is appointed Prime Minister by the President. The President then appoints other ministers on the advice of the Prime Minister. The Prime Minister can remain in office only as long as he or she enjoys majority support in the Parliament.

The Judiciary: The judiciary is independent of the executive. It is the guardian and interpreter of the Constitution. The Supreme Court is the highest judicial tribunal, positioned at the apex of a single unified system for the whole country. Each State has its own High Court. A uniform code of civil and criminal laws applies to the whole country. The States: A the state have their own Legislative Assemblies and in certain cases a second Chamber. All members of the Legislative Assemblies are elected by universal adult franchise. The Head of the States are called Governors. Appointed by the President, they normally exercise the same powers in the States as the President does at the Union government level. As in the Central Government, each State has a Cabinet headed by the Chief Minister responsible to the elected State Legislature. Election Commission: The electoral machinery is centralized in an independent statutory body called the Election Commission. The Commission is responsible for the 'superintendence, direction and control' of the electoral rolls for all elections to Parliament and to the State Legislatures and also for conducting the elections.

2.1.2. Government policies:

The Indian Automobile Industry plays a major role in the economic scenario of the country. The automobile sector in India has record sales of more than one million passenger cars per year. The percentage of automobile exports has risen significantly during the last few years. The government policies on Indian automobile industry have been framed in order to aid in the expansion of the automobiles sector in India.

FDI policy:
Foreign Direct Investment (FDI) is normally defined as a form of investment made in order to gain unwavering and long-lasting interest in enterprises that are operated outside of the economy of the shareholder/ depositor. In FDI, there is a parent enterprise and a foreign associate, which unites to form a Multinational Corporation (MNC). In order to be deemed as a FDI, the investment must give the parent enterprise power and control over its foreign affiliate.

Foreign Direct Investment in India: In India, Foreign Direct Investment Policy allows for investment only in case of the following form of investments:

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Through financial alliance Through joint schemes and technical alliance Through capital markets, via Euro issues Through private placements or preferential allotments

Foreign Direct Investment in India is not allowed under the following industrial sectors:
Arms and ammunition Atomic Energy Coal and lignite Rail Transport

Mining of metals like iron, manganese, chrome, gypsum, sulfur, gold, diamonds, copper, zinc INTENT AND OBJECTIVE: It is the intent and objective of the Government of India to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills, for accelerated economic growth. Foreign Direct Investment, as distinguished from portfolio investment, has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor. The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep? pace with the regulatory changes, effected in the interregnum. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes/ Press Releases which are notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue

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of Security by Persons Resident Outside India) Regulations, 2000 (notification No. FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/ Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vides A.P. Dir. (series) Circulars. The regulatory framework, over a period of time, thus, consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc. The present consolidation subsumes and supersedes all Press Notes/Press Releases/Clarifications/ Circulars issued by DIPP, which were in force as on April 09, 2012, and reflects the FDI Policy as on April 10, 2012. This Circular accordingly will take effect from April 10, 2012. Reference to any statute or legislation made in this Circular shall include modifications, amendments or re-enactments thereof.6 Notwithstanding the rescission of earlier Press Notes/Press Releases/Clarifications/Circulars, anything done or any action taken or purported to have been done or taken under the rescinded Press Notes/Press Releases/Clarifications/Circulars prior to April 10, 2012, shall, in so far as it is not inconsistent with those Press Notes/Press Releases/Clarifications/Circulars, be deemed to have been done or taken under the corresponding provisions of this circular and shall be valid and effective. ENTITIES INTO WHICH FDI CAN BE MADE: FDI in an Indian Company: Indian companies can issue capital against FDI. FDI in Partnership Firm / Proprietary Concern: (i) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest in the capital of a firm or a proprietary concern in India on non-repatriation

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basis provided; (a) Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with Authorized Dealers / Authorized banks. (b) The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector.

(c) Amount invested shall not be eligible for repatriation outside India.16 (ii) Investments with repatriation option: NRIs/PIO may seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option. The application will be decided in consultation with the Government of India. (iii)Investment by non-residents other than NRIs/PIO: A person resident outside India other than NRIs/PIO may make an application and seek prior approval of Reserve Bank for making investment in the capital of a firm or a proprietorship concern or any association of persons in India. The application will be decided in consultation with the Government of India. (iv)Restrictions: An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or print media.

Export policy: Interest on duty foregone under duty exemption schemes:

The Exim Policy provides import of Capital Goods, raw materials, components, consumables etc. either under concessional duty rate or at zero duty for carrying out manufacturing activities with time bound export obligations. Due to some unavoidable changed circumstances, if the importer is not able to fulfill

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the obligation, then importer needs to regularize the imports on payment of duty + interest @ 15% p.a Under the prevailing market conditions, the ruling interest rate is in the range of 6% to 8% p.a for all types of transactions. To reduce the burden and to bring down the transaction cost, the interest rate for regularization of imports need to be plugged max. @ 10% p.a. Exporters who undertake the business risks can survive during uncertainties.

Duty Free Credit Entitlement License:

Licensing authorities are issuing DFCE license for service providers served from India as per para 3.6.4.1 of Foreign Trade Policy 2004-09, which is cover under Customs Notification 54/2003-cus dated 01-042003.Whereas the Licensing authorities are not issuing DFCE License for Status Holders (Manufacturer & Exporters), which is covered under customs notification 53/2003-cus dated 01-04-2003. Even if they have issued, the license is not operative, for the reason that Customs are insisting that the License should read as "DFCE issued for Status Holder", whereas it is mentioned as "Service Provider served from India Scheme. Advance Income tax has been paid (approx. 36%) for this accrued export benefit-DFCE License, whereas it is not operational.The last date for submission of DFCE application for Status Holder has been extended to 31-03-2005 from 31-12-2004 as per Policy circular No. 12/2004-09 dated 28-122004, which shows the intention of Licensing authority for issuing DFCE License for Status Holders Indian automotive industry has been registering a healthy growth in terms of its exports as well. The industry crossed an exports turnover of USD 8 billion in the year 2005-06, with the share of exports in industry turnover being around 24% (GOI 2006b). India exports both automobiles as well as autocomponents to markets around the world. The key destinations include South Asian neighbors, European Union (Germany, UK, Belgium, The Netherlands and Italy), Middle East and North America (GOI 2006a). Increasing pressure in the global competition to source from low-cost countries combined with the skills and quality advantages of India, is the commonly cited explanation for the growth in Indias automotive exports; see for instance Singh (2004) and GOI (2006a). Additionally, supporting policy measures of the Indian government such as export-linked fiscal incentives, establishment of exportprocessing zones, bilateral or multilateral trade agreements with other countries, etc. have furthered this growth. the Indian automobile industry is witnessing rising exports in all vehicle types. The exports grew at a CAGR of 14% for passenger vehicles, 36% for CVs, 20% for 3-wheelers and 33% for 2-wheelers for the period 2003-04 to 2007-08. Both domestic as well as foreign automobile manufacturers have been instrumental in such a growth, by making either direct or indirect exports. The domestic manufacturers are forging partnerships with foreign players or are making outward foreign investments for developing and strengthening their sales overseas. On the other hand, several foreign manufacturers have made India

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the manufacturing base for some of their products meant for regional or global exports; see for instance IBEF (2005). In value terms, the exports of the Indian automobile industry crossed USD 2 billion in the year 2005-06 (GOI 2006a). All this testifies to the fact that the Made in India brand is gaining increasing acceptance in the global export markets. the exports of the Indian auto-component industry grew at an impressive CAGR of 30% (value-wise) over the period 2003-04 to 2007-08. The improvement in export performance is also reflected in the shift in composition of customer base for exports made by the industry. In the year 2007, India shipped 75% of its auto component exports to global OEMs/Tier-1 suppliers and 25% to the aftermarket, in contrast to 65% to aftermarket and 35% to global OEMs/Tier-1 suppliers in 1990s (ACMA 2008a). Such a shift has manifested itself in several foreign OEMs and Tier-1 suppliers establishing their purchasing offices or subsidiaries in India for the purpose of component sourcing. Also, foreign OEMs and suppliers are increasingly integrating the Indian auto-component manufacturers into their global sourcing strategies. All this attests to the fact that the Indian autocomponent industry has been able to establish a cost-competitive and quality-conscious image in the global auto industry. With the continuing trend of global outsourcing, the exports of Indian autocomponent industry are estimated to reach USD 25 billion by 2015 (ACMA 2008a).

2.1.3. Political stability:

India developed into one of the most promising economies in the world over the past few years. However, conducting business here can be impossible for expats without understanding the social and political dynamics of the country. Indian politicians come from a diverse set of backgrounds. You have a highly-educated Sikh prime minister, a female ruling party leader of foreign origin, and even a Dalit chief minister from very humble roots. In 2009, the countrys score on the Global Political Risk Index (GPRI) remains at 62 on a scale of 100, with a ranking of no.12. When multinational corporations signal interest in investing in the country, one of the first roadblocks they face is caste-based and regional politics that claim to fight for the interests of the people. One example is the case of Wal-Mart. Even after a tie-up with the Indian major Bharti, the political clout wielded by local parties posed significant problems for their entry. There is also the case of the Tata Nano plant in Singur, which was shut down owing to protests from political parties fighting for the locals who were being displaced. Other examples include the 1977 exit of big multinationals such as Coca Cola and IBM due to the governments insistence of them enlisting on the countrys stock exchanges to carry on operations.

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The bane of Indian politics is the relationship shared by the state and central governments. Since some states are ruled by parties other than the ones at the center, they have the ability to hold the government hostage to their demands. There have been numerous instances of regional parties calling for a statewide strike, when they oppose the stand taken by the center. This political arm-wringing has an adverse effect on development and business in the country. In terms of ease of doing business, India ranks a lowly 133 amongst 183 countries. It was also ranked 70 in the corruption index of 2006 and the Worst Performer out of 30 countries in the Bribe Payer Index. Government approvals involve red-tape at almost every level, and it hardly comes as a surprise that most small businesses fail to survive in the ruthless landscape they operate in. Most expatriates wanting to set up shop in the country find adjusting to the political and bureaucratic pressures, corruption, unstructured approval processes, and decision-making delays from administrators not worth the returns that they can expect on their investment. While there is no doubt that India is fast ascending the ladder to superpower status in the world, its ascension is sure to hit a stumbling block unless corruption and red-tapism are tackled head on.

2.2. Economic Analysis:

2.1.1. Economic indicators: GDP growth:
The Gross Domestic Product (GDP) in India expanded expanded 5.3 percent in the first quarter of 2012 over the same quarter of the previous year. Historically, from 2000 until 2012, India GDP Growth Rate averaged 7.3700 Percent reaching an all-time high of 11.8000 Percent in December of 2003 and a record low of 1.6000 Percent in December of 2002. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. This page includes a chart with historical data for India GDP Growth Rate.

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 FDI inflow and outflow:

India's economy is mostly dependent on its large internal market with external trade accounting for just 20% of the country's GDP. Until the liberalization of 1991, India was largely and intentionally isolated from the world markets, to protect its economy and to achieve self-reliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions, while foreign direct investment (FDI) was restricted by upper-limit equity participation, restrictions on technology transfer, export obligations and government approvals; these approvals were needed for nearly 60% of new FDI in the industrial sector. The restrictions ensured that FDI averaged only around US$200 million annually between 1985 and 1991; a large percentage of the capital flows consisted of foreign aid, commercial borrowing and deposits of non-resident Indians. Indias exports were stagnant for the first 15 years after independence, due to the predominance of tea, jute and cotton manufactures, demand for which was generally inelastic. Imports in

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the same period consisted predominantly of machinery, equipment and raw materials, due to nascent industrialization. Since liberalization, the value of India's international trade has increased sharply. India's major trading partners are the European Union, China, the United States and the United Arab Emirates. The exports during April 2007 were $12.31 billion up by 16% and import were $17.68 billion with an increase of 18.06% over the previous year. In 2006-07, major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jeweler, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver. Its September 2010 exports were reported to have increased 23% year-on-year to US$18.02billion, while its imports were up 26.1% at $27.14billion. At US$13.06billion Augusts trade gap was the highest in 23 months but the economy is well on the road to cross $200 billion mark in exports for the financial year 2010-11.India is a founding-member of General Agreement on Tariffs and Trade (GATT) since 1947 and its successor, the WTO. While participating actively in its general council meetings, India has been crucial in voicing the concerns of the developing world. For instance, India has continued its opposition to the inclusion of such matters as labor and environment issues and other non-tariff barriers into the WTO policies.

Position in the country in world competitiveness ranking:

India may boast of its economic growth and open market economy, but we still rank 50th in global competitiveness. Although, India derives substantial advantages not only from its market size (ranked 4th for its domestic market size and 5th for its foreign market size), but also from its strong business sophistication (ranked 27th) and innovation (ranked 32nd), its overall competitive position is weakened by its macroeconomic instability (109th), with the government running one of the highest deficits in the world (ranked 127th), unsustainable levels of government debt (ranked 113th), and fairly high inflation. 2.2.2. Purchasing party:

Per capita income:

India's per capita income, often used to measure a country's standard of living, increased by 14.5 per cent during 2009-10 to Rs 46,492, Parliament was informed today. In 2008-09, the per capita income, which measures the income per person in a population, was Rs 40,605, Statistics and Programme Implementation Minister M S Gill said in a written reply in the Lok Sabha. The per capita income at

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factor cost during 2008-09 and 2009-10 are estimated as Rs 40,605 and Rs 46,492, respectively, at current prices," said Gill. In response to a query, he said, the separate per capita income figures for rural and urban areas are available till the base year 2004-05, as the data is compiled only in the base year of the National Accounts Statistics. As per the base year 2004-05, the per capita income in rural areas was Rs 16,327, while in the urban areas it stood at Rs 44,223."The major disparity in the urban and rural per capita income is high income in urban areas and high population concentration in rural areas," said Gill. He said the government is providing employment in villages through the Mahatma Gandhi National Rural Employment Scheme and the Bharat Nirman programs, with an aim to increase the per capita income in the rural areas.

Living cost:
Due largely to high property prices in the major cities of Mumbai and New Delhi, the cost of living in India can be quite expensive for expats seeking a high quality of life. Mumbai has the fourth most expensive property market in the world and Delhi isn't far behind. Yet these high costs of living in India can often be negated by cheap, but top rate healthcare; inexpensive food and goods; and a working life that yields a high salary. Expats in India are among the highest paid globally, and many expats receive relocation packages, including complimentary housing or housing allowances, which balance out the expensive part of living in India. Many India expats can grow accustomed to luxuries not afforded to them in their home countries such as maid services, chauffeurs and the Indian tradition of hot, home-cooked lunches delivered to their work. Expats residing in India must pay income tax, which is calculated on a progressive scale. There is no tax on salaries less than INR 160,000 per year; 10 percent on an amount earned between INR 160,000 and INR 300,000; 20 percent on an amount earned between INR 314,000 and INR 500,000; 30 percent on an amount earned above INR 500,000.Restaurant dinners cost around INR 840, and fine dining can be had for half of what it may cost in Europe. Expats like imported Western food which tends to be as expensive as in shops back home (INR 96/kg for fillet steak), but fresh vegetables and fruit can be bought for small change. Satellite television costs about INR 1,700 per month and broadband Internet is available from INR 1,500 per month.

2.2.3: Human development:

Employment rate: Economic reforms may have given a boost to industrial productivity and brought in foreign investment in capital intensive areas. But the boom has not created jobs. This was not unexpected. According to a report

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by the Washington-based Institute of Policy Studies (IPS), the combined sales of the world's top 200 MNCs is now greater than the combined GDP of all but the world's nine largest national economies. Yet, the total direct employment generated by these multinationals is a mere 18.8 million -one-hundredth of one per cent of the global workforce. India's Ninth Five-Year Plan projects generation of 54 million new jobs during the Plan period (19972002). But performance has always fallen short of target in the past, and few believe that the current Plan will be able to meet its target. India's labor force is growing at a rate of 2.5 per cent annually, but employment is growing at only 2.3 per cent. Thus, the country is faced with the challenge of not only absorbing new entrants to the job market (estimated at seven million people every year), but also clearing the backlog. Sixty per cent of India's workforce is self-employed, many of whom remain very poor. Nearly 30 per cent are casual workers (i.e. they work only when they are able to get jobs and remain unpaid for the rest of the days). Only about 10 per cent are regular employees, of which two-fifths are employed by the public sector. More than 90 per cent of the labor force is employed in the "unorganized sector", i.e. sectors which don't provide with the social security and other benefits of employment in the "organized sector." In the rural areas, agricultural workers form the bulk of the unorganized. In urban India, contract and subcontract as well as migratory agricultural laborers make up most of the unorganized labor force. Unorganized sector is made up of jobs in which the Minimum Wage Act is either not, or only marginally, implemented. The absence of unions in the unorganized sector does not provide any opportunity for collective bargaining. Over 70 per cent of the labor force in all sector combined (organized and unorganized) is either illiterate or educated below the primary level. The Ninth Plan projects a decline in the population growth rate to 1.59 per cent per annum by the end of the Ninth Plan, from over 2 per cent in the last three decades. However, it expects the growth rate of the labor force to reach a peak level of 2.54 per cent per annum over this period; the highest it has ever been and is ever likely to attain. This is because of the change in age structure, with the highest growth occurring in the 15-19 years age group in the Ninth Plan period.

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The addition to the labor force during the Plan period is estimated to be 53 million on the "usual status" concept. The acceleration in the economy's growth rate to 7 per cent per annum, with special emphasis on the agriculture sector, is expected to help in creating 54 million work opportunities over the period. This would lead to a reduction in the open unemployment rate from 1.9 per cent in 1996-97 to 1.47 per cent in the Plan's terminal year, that is, by about a million persons - from 7.5 million to 6.63 million. In other words, if the economy maintains an annual growth of 7 per cent, it would be just sufficient to absorb the new additions to the labor force. If the economy could grow at around 8 per cent per annum during the Plan period, the incidence of open unemployment could be brought down by two million persons, thus attaining near full employment by the end of the Plan period, according to the Plan. However, there appears to be some confusion about the figure of open unemployment. The unemployment figure given in the executive summary of the Ninth Plan, gives the figure of open unemployment at 7.5 million while the annual report of the Labor Ministry, for 1995-96, puts the figure for 1995 at 18.7 million. An internal government paper prepared in 1997 put the unemployment figure at the beginning of the Eighth Plan at 17 million and at 18.7 million at the end of 1994-95. Perhaps the Planning Commission referred to the current figure while the Labor Ministry figure referred to the accumulated unemployment backlog.

Unemployment rate:
The unemployment rate in India was last reported at 3.8 percent in 2010/11 fiscal year. Historically, from 1983 until 2011, India Unemployment Rate averaged 7.5700 Percent reaching an all-time high of 9.4000 Percent in December of 2009 and a record low of 3.8000 Percent in December of 2011. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labor force. This page includes a chart with historic

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A data for India Unemployment Rate

Life expectancy rate at birth and other health facilities:

The Life expectancy at birth; total (years) in India was 64.78 in 2009, according to a World Bank report, published in 2010. The Life expectancy at birth; total (years) in India was reported at 64.42 in 2008, according to the World Bank. Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life. This page includes a historical data chart, news and forecasts for Life expectancy at birth; total (years) in India. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points.

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Approximately 1.72 million children die each year before turning one. The under-five mortality and infant mortality rates have been declining, from 202 and 190 deaths per thousand live births respectively in 1970 to 64 and 50 deaths per thousand live births in 2009. However, this rate of decline is slowing. Reduced funding for immunization leaves only 43.5% of the young fully immunized. A study conducted by the Future Health Systems Consortium in Murshidabad, West Bengal indicates that barriers to immunization coverage are adverse geographic location, absent or inadequately trained health workers and low perceived need for immunization. Infrastructure like hospitals, roads, water and sanitation are lacking in rural areas. Shortages of healthcare providers, poor intra-partum and newborn care, diarrheal diseases and acute respiratory infections also contribute to the high infant mortality rate.

Health facilities: Diseases:

Diseases such as dengue fever, hepatitis, tuberculosis, malaria and pneumonia continue to plague India due to increased resistance to drugs. And in 2011, India developed a totally drug-resistant form of tuberculosis. India is ranked 3rd among the countries with the most HIV-infected. Diarrheal diseases are the primary causes of early childhood mortality. These diseases can be attributed to poor sanitation and inadequate safe drinking water in India. However in 2012 India was polio free for the first time in its history. Indians are also at particularly high risk for atherosclerosis and coronary artery disease. This may be attributed to a genetic predisposition to metabolic syndrome and changes in coronary artery vasodilation. NGOs such as the Indian Heart Foundation and the Medwin Foundation have been created to raise awareness about this public health issue.

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Poor sanitation:
As more than 122 million households have no toilets, and 33% lack access to latrines; over 50% of the population (638 million) defecates in the open. This is relatively higher than Bangladesh and Brazil (7%) and China (4%). Although 211 million people gained access to improved sanitation from 19902008, only 31% uses them. 11% of the Indian rural families dispose of stools safely whereas 80% of the population leave their stools in the open or throw them in the garbage. Open air defecation leads to the spread of diseases and malnutrition through parasitic and bacterial infections.

Inadequate safe drinking water:

Access to protected sources of drinking water has improved from 68% of the population in 1990 to 88% in 2008. However, only 26% of the slum population has access to safe drinking water, and 25% of the total population has drinking water on their premises. This problem is exacerbated by falling levels of groundwater caused mainly by increasing extraction for irrigation. Insufficient maintenance of the environment around water sources, groundwater pollution, excessive arsenic and fluoride in drinking water pose a major threat to India's health.

Rural health:
Rural India contains over 68% of India's total population with half of it living below poverty line, struggling for better and easy access to health care and services Health issues confronted by rural people are diverse and many from severe malaria to uncontrolled diabetes, from a badly infected wound to cancer. Postpartum maternal morbidity is a serious problem in resource-poor settings and contributes to maternal mortality, particularly in rural India; however, Misoprostal has been identified as a cost-effective maternal mortality intervention for home births. A study conducted in 2009, using multinomial logistic regression methods, found that 43.9% of mothers reported to have experienced postpartum morbidities six weeks after delivery. Rural medical practitioners are highly sought after by people living in rural India as they more financially affordable and geographically accessible than practitioners working in the formal public health care sector. The National Rural Health Mission (NRHM) was launched in April 2005 by the Government of India. The goal of the NRHM is to provide effective healthcare to rural people with a focus on 18 states which have poor public health indicators and/or weak infrastructure.

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2.3. Social analysis:

2.3.1. Language:
The official language of the Republic of India is Hindi with English as an additional language for official work; states in India can legislate their own official languages. Neither the Constitution of India, nor any Indian law defines any national language. States specify their own official language(s) through legislation. The section of the Constitution of India dealing with official languages therefore includes detailed provisions which deal not just with the languages used for the official purposes of the union, but also with the languages that are to be used for the official purposes of each state and union territory in the country, and the languages that are to be used for communication between the union and the states inter se. During the British Raj, English was used for most official purposes both at the federal level and in the various states. The Indian constitution adopted in 1950, envisaged the gradual phasing in of Hindi, to replace English over a fifteen-year period, but gave Parliament the power to, by law, provide for the continued use of English even thereafter. But resistance to making Hindi the sole official language has resulted in English being retained for official uses. English continues to be used today, in combination with Hindi (at the central level and in some states) and other languages (at the state level). The legal framework governing the use of languages for official purpose currently includes the Constitution, the Official Languages Act, 1963, Official Languages (Use for Official Purpose of the Union) Rules, 1976, and various state laws, as well as rules and regulations made by the central government and the states.

2.3.2. Religion:
India is the birthplace of Hinduism, Buddhism, Jainism and Sikhism, collectively known as Indian religions.Indian religions, also known as Dharmic religions are a major form of world religions along with Abrahamic ones. Today, Hinduism and Buddhism are the world's third and fourth-largest religions respectively, with over 2 billion followers altogether, and possibly as many as 2.5 or 2.6 billion followers. India is one of the most religiously diverse nations in the world, with some of the most deeply religious societies and cultures. Religion still plays a central and definitive role in the life of many of its people.According to a 2001 census of India, the religion of 80% of the people is Hinduism. Islam is

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practiced by around 13% of all Indians. The country had over 23 million Christians, over 19 million Sikhs, about 8 million Buddhists and about 4 million Jains. Sikhism, Jainism and especially Buddhism are influential not only in India but across the world. Christianity, Zoroastrianism, Judaism, and the Bahai are also influential but their numbers are smaller. Atheism and agnostics also have visible influence in India, along with a self-ascribed tolerance to other people. The Hindu religion has many schools, each with their own unique views. For example, according to Yogavasistha, a spiritual text of the Advaita school of Hindu religion, the values of the liberated, selfactualized human being, may be summarized as follows: "Pleasures do not delight him; pains do not distress. Although engaged in worldly actions, he has no attachment to any object. He is busy outwardly, yet calm inwardly. He feels free from restrictions of scriptures, customs, age, caste or creed. He is happy, but his happiness does not depend on anything else. He does not feel needy, proud, agitated, troubled, depressed or elated. He is full of compassion and forgiveness even to those who mean him harm. He does the right thing, regardless of the pressures. He is patient, perseverant, and without any impurity in his heart. He is free of delusions; he does not crave for anything. His sense of freedom comes from his spirit of inquiry. The fruits of his inquiry are his strength, intellect, efficiency and punctuality. He keeps company of wise and enlightened persons. He is content. There is significant historical discourse in India on the notion, relevance, and the existence and non-existence of God. Dharmakirti, for example, in 7th century wrote in Pramanavarttikam.

2.3.3. Education:
Education in India is provided by the public sector as well as the private sector, with control and funding coming from three levels: central, state, and local. The Nalanda University was the oldest universitysystem of education in the world. Western education became ingrained into Indian society with the establishment of the British Raj. Education in India falls under the control of both the Union Government and the states, with some responsibilities lying with the Union and the states having autonomy for others. The various articles of the Indian Constitution provide for education as a fundamental right. Most universities in India are controlled by the Union or the State Government. India has made progress in terms of increasing primary education attendance rate and expanding literacy to approximately two thirds of the population. India's improved education system is often cited as one of the main contributors to the economic rise of India. Much of the progress especially in Higher

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education, Scientific research has been credited to various public institutions. The private education market in India is merely 5% although in terms of value is estimated to be worth $40 billion in 2008 and will increase to $78 billion by 2012.However, India continues to face stern challenges. Despite growing investment in education, 25% of its population is still illiterate; only 15% of Indian students reach high school, and just 7%, of the 15% who make it to high school, graduate. The quality of education whether at primary or higher education is significantly poor as compared with major developing nations. As of 2008, India's post-secondary institutions offer only enough seats for 7% of India's college-age population, 25% of teaching positions nationwide are vacant, and 57% of college professors lack either a master's or PhD degree. As of 2011, there is 1522 degree-granting engineering colleges in India with an annual student intake of 582,000, plus 1,244 polytechnics with an annual intake of 265,000. However, these institutions face shortage of faculty and concerns have been raised over the quality of education.

2.3.4. Social Strata:

In India, caste is one set of role cards and perhaps the most important one. Ones caste is ascribed; that is, children inherit the status and functions of their parents. At birth Indians are dealt their caste card. This is alien to what many people in the United States believe about the good society. Our parents, relatives, teachers, and friends tell us in a thousand ways that what we make of our lives depends on our efforts, and many of us think all societies should play by the same rules, or at least strive to do so. But it is important to remember that there is no society where individual effort is the sole criterion for status.

While caste is a very important set of role cards, Indians, like Americans, also use class (economic) cards. Both caste and class operate at the same time. A person of very low caste such as a sweeper may get a good job that has nothing to do with sweeping and save some money. With this wealth the sweeper may build a fancy house and educate his children who then become doctors, lawyers, and government leaders. This type of role is usually achieved, although some people inherit their wealth. There is also the possibility of achieving political power in India quite apart from class or caste status. A low caste person might be very good at winning elections and become a member of the central government. Jagjivan Ram, a member of one of the Dalit (ex- Untouchable) castes, has held many cabinet posts in his political career. This system of gaining status is based on power. Power is usually achieved status rather than a role that is dealt at birth. People in India participate in the caste game, the class game, and the power game. IN India, castes are ranked, and caste members in a specific geographical area can identify those castes that are above and below them. The ranking of castes is based on purity and

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pollution, often associated with functions of the human body. Roles associated with the head such as thinking, talking, teaching, and learning are considered pure. Activities associated with waste, feet, and skin is considered polluting. Consequently, Brahmins at the top of the purity scale were scholars who traditionally taught and presided at religious functions. Untouchables, at the bottom of the scale, cleared away human waste, collected garbage, cut hair, skinned animals, and washed clothes. Because their occupations mainly dealt with human, animal, and societal waste, society believed that contact with an Untouchable was highly polluting.

Preparing and sharing of food reveals how castes are ranked. Food cooked in oil and prepared by a Brahmin can be accepted and eaten by any caste below it. Food cooked in water can generally be accepted by ones own caste members or inferior castes. Leftover, uneaten food almost always is taken only by the very low castes. Food that can be eaten raw is the most freely distributed and can be accepted by any caste from any caste. In addition, prasad, blessed food that is left over from religious offerings, is given to anyone regardless of caste.

There is also a range of pure and impure foods. Vegetables and grains are purer than meat and eggs. Fish is the purest of the non-vegetarian foods, followed by chicken, goats, pork, and water buffalo; the most impure is beef. Sweet pastries, fried in deep fat, are among the most widely acceptable foods from any caste. By observing how food is prepared and with whom it is shared, one can begin to determine the ranking on a purity-pollution scale of the caste groups involved.

2.4. Technological analysis:

2.4.1. Infrastructure:
While the Indian car sector is travelling in the fast lane, road and public transport projects have not kept pace. Indians bought about 2.5 million cars last year, worth US$30 billion, while another half a million were exported. This year, assuming that car-loan rates decline and the economy improves, the market could grow by 10 to 12 per cent and even if rates remain static, the car market will still grow by 5 to 7 per cent. But even these figures pale in comparison to the 30 per cent growth experienced in 2010, at which time interest

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rates were lower and the economy was booming, and the double-digit annual sales throughout the 2000s. No wonder global automakers scrambled to attend the 2012 Delhi Auto Expo earlier this year, where some 60 new models were launched. Significantly, almost all cars sold in the country are now made in India, meaning they use between 70 and 98 per cent Indian components. The logic is simple: the more Indian the car is, the cheaper it becomes, partly because it is cheap to manufacture cars in India, and partly because the tax structure is skewed in favor of domestic manufacturing. Economic analyst Jayanta Roy Chowdhury has argued that this is the result of shrewd planning by Indian policy makers, who in the 1990s lured global automakers to India with the bait of its huge domestic market, but cleverly brought in a tax structure that discourages imports of built-up and knocked-down car kits. This policy brought automotive majors like General Motors, Honda, Mercedes Benz, Audi and the nowdefunct Daewoo to India. These firms all made huge investments in setting up factories and developing Indian vendors who could eventually make quality spare parts. Thanks to this policy, Indias automotive industry today is worth an estimated US$35 billion and provides direct and indirect employment to over 13 million people. India emerged as Asias fourth-largest exporter of passenger cars in 2009, behind Japan, South Korea and Thailand. It is estimated that India could be making five million cars by 2015, or seven million by 2020. But even after taking into account a commensurately higher number of exports, most of these cars will still likely be driving on Indian roads. This raises an inevitable question: are there enough roads in India to take these vehicles? While the automotive industry is booming, road and transport projects have not kept pace. Outside of the few key highways and roads in major cities, many Indians still commute using lanes and unpaved roads. The boom in the automotive sector is the direct consequence of poor public-transport infrastructure that has not kept up with Indias rapid urbanization.

Human resources in the prospect of Indian automobile industry:

The second major challenge is the creation of highly skilled human resource required for the auto industry. Auto industry, like many other industries is facing severe shortage of skilled technical as well as managerial manpower. This challenge becomes all the more daunting because faults lie at a more fundamental level of training infrastructure and the social perception.

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In India, engineering colleges and technology institutions impart engineering education. Many of these institutions used to provide training in automotive engineering through well-established Internal Combustion Engineering (ICE) and Mechanical Engineering departments. However, the new wave of IT, electronics and communication technology has forced these institutions to close down ICE departments and also reduce the number of Mechanical Engineering departments. The well-known ICE department of the Indian Institute of Science that produced high quality research and trained manpower is a sad example of these developments. It is true that more than 50 per cent of the total components of the current automobiles are electronic and that the importance of communication technology is also increasing. However, the advances and training in these areas cannot be at the cost of the fundamental aspects of auto engineering including thermodynamics. Therefore, we need to redesign our automotive engineering courses and brand them properly to attract good students. This will help in not only increasing the number of auto engineers, which is crucial to the growth of the auto industry, but also getting the human resources to carry out research in the auto sector and achieve breakthroughs necessary for designing the nextgeneration vehicles. There is also an urgent need to improve the quality of skilled and semi-skilled manpower working in the auto industry. To do this the existing vocational educational institutions have to be upgraded and more number of such institutes should be started. Today, most of our vocational educational institutes have poorly trained, unmotivated and uninspiring teaching faculty, and outdated equipment, machines, syllabus and governance system. National Knowledge Commission, in its recent report has given several recommendations to improve vocational training in this country. The Central Government has accepted all the recommendations. Two major recommendations are rebranding the vocational education by updating the syllabus and public-private partnership (PPP) in the establishment and governance of vocational educational institutes. Accordingly, the finance minister has allotted an initial amount of Rs. 1,000 crores in this year's budget to establish a corporation of Rs. 15,000 croreoutlay through PPP model. It is hoped that this corporation will help immensely in revolutionizing and making the vocational education more relevant to the contemporary needs.

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3 .Analysis of national competitiveness:

3.1.Factor Endowment:
Location: The Indian Automobile industry includes two-wheelers, trucks, cars, buses and three-wheelers which play a crucial role in growth of the Indian economy. India has emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. The country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads by 2050. Size of the Industry Geographical distribution 2.6 Million Units Jamshedpur, Pune, Lucknow, Gurgoan, Delhi, Mumbai, Bangalore, etc

Labor : While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labor costs in designing and engineering automobiles. In India, labor cost is quite chep. This is a great advantage of Indians automobile industry. India today is well known as a potential emerging automobile market and jobs in the automobile industry are rising. Several foreign investments are pouring into Indian automobile industry. It has become a major three-wheeler market and two-wheeler manufacturer in the world. India is also the second largest manufacturer of tractors. Candidates with bachelor's degree in mechanical, electrical or automobile engineering are eligible to get good job opportunities in automobile companies. For the candidates with diploma courses and ITI courses there are many opportunities in this industry. Automobile companies even require IT specializations. While technical education is offered by plenty of engineering and polytechnic colleges in India,. the eligible candidates are selected by the companies. The considerable wide scope of Automobile sector, it is not that surprising that more and more candidates are dreaming to develop a career in Automobile Industry. With foreign automobile companies like

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Volkswagen, Audi, Renault etc coming in and targeting India as a base for manufacturing cars, the scope for a career in Automobile Industry is rising rapidly. Raw material: The Economic progress of this industry is indicated by the amount of goods and services produced which give the capacity for transportation and boost the sale of vehicles. There is a huge increase in automobile production with a catalyst effect by indirectly increasing the demand for a number of raw materials like steel, rubber, plastics, glass, paint, electronics and services. Demographics of a Potential Car Owner : 1. Medium high class societies 2. Affluent. 55% hold at least a graduate degree 3. Owns a broadband connection 4. Owns 2 mobile phones 5. Surfs internet more than 10 hours a week 6. Average household income above Rs 30,000 a month 7. Single: 35% Married: 65%

3.2. Demand Condition:

Demand is linked to economic growth and rise in income levels. Per capita penetration at around nine cars per thousand people is among the lowest in the world (including other developing economies like Pakistan in segments like cars). While the industry is highly capital intensive in nature in case of four-wheelers, capital intensity is a lot less for two-wheelers. Though three-wheelers and tractors have low barriers to entry in terms of technology, four wheelers is technology intensive. Costs involved in branding, distribution network and spare parts availability increase entry barriers. With the Indian market moving towards complying with global standards, capital expenditure will rise to take into account future safety regulations. As compared to their global counterparts, both the two-wheeler as well as four wheeler segments are relatively lesser fragmented. However, things are changing, especially on the passenger cars front as many foreign majors are eyeing the Indian market. As a result, pricing power is likely to diminish going forward.

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In India , passenger car sales grew by 10.84% and crossed the 1 million mark in 2006-07 and record sales of 1,076,408 vehicles. Utility vehicles sales grew by almost 12.2% in April-May 2007 compared to the same period last year. Various manufacturers have entered this category and this segment is expected to grow at 20% by 2010. Multipurpose vehicles sales grew by almost 21.93% in April-May 2007 compared to the same period last year.

3.3. Related And supporting Industries :

The automobile manufacturers are competing against each other on value, features, quality, style and customization to appeal to their customers. In the automobile sector, the buyers wield considerable power. The manufacturers depend on them to stay in business. If they cannot keep their buyers happy then they risk losing them to their competitors. The buyers have low switching cost if they are not happy. The automobile manufacturers are competing against each other on value, features, quality, style and customization to appeal to their customers. In the past when the economy was not liberalized, the car manufacturers themselves had much of the power, but with the entry of foreign companies after liberalization the power switched from SELLERS to BUYERS as the foreign manufacturers offered alternatives to domestic vehicles. However, the bargaining power with the buyers is MODERATELY high & not completely high, the reason being that the buyers are not large but few in number. Second, the buyers do not have the ability to integrate backwards into the industry, if they want a car then they have to purchase it from a car dealer only, they themselves wont manufacture a car.

3.4. Firm structure, strategy and rivalry:

Despite the high concentration ratio seen in the automobile sector, rivalry in the Indian auto sector is intense due to the entry of foreign companies in the market. The industry rivalry is extremely high with any being product being matched in a few months by the competitors. This instinct of the industry is primarily driven by technical capabilities acquired over years of gestation under the technical collaboration with international players.

Strategy and chance:

Automobile industry in India also received an unintended boost from stringent government auto emission regulations over the past few years. This ensured that vehicles produced in India conformed to the standards of the developed world.

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Though it has an advantage in India, thanks to low costs and government policies it soon faces stiff competition from it multinational competitors all eyeing for a share in the ever growing Indian auto sector. The policies adopted by Government will increase competition in domestic market, motivate many foreign commercial vehicle manufactures to set up shops in India, whom will make India as a production hub and export to nearest market. Bring in a minimum foreign equity of US $ 50 Million if a joint venture involved majority

foreign equity ownership Automatic approval for foreign equity investment upto 100% of manufacture of automobiles and

component is permitted FIIs including overseas corporate bodies (OCBs) and NRIs are permitted to invest up to 49 per

cent of the paid-up equity capital of the investee company, subject to approval of the board of directors and of the members by way of a special resolution. . Investments in making auto parts by a foreign vehicle maker will also be considered a part of the

minimum foreign investment made by it in an auto-making subsidiary in India. The move is aimed at helping India emerge as a hub for global manufacturing and sourcing for auto parts. Specific component of excise duty applicable to large cars and utility vehicles will be reduced to

15,000 rupees per vehicle from 20,000 rupees earlier. The Proposal by the Govt. to set up an expert group to advise on a viable and sustainable system

of pricing petroleum products, as this will surely had an impact on the Automobile Industry. The announced reduction on the basic customs on bio-diesel is great news for all companies

working on environmental saving technologies.

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4. SWOT:
Strengths
Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etc

Weaknesses
Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck

Opportunities
Commercial vehicles: SC ban on overloading Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties Rising rural demand

Threats
Rising input costs Rising interest rates Cut throat competition

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5. DECISION (Appropriate Entry Model :)

The Appropriate Entry mode for the Automobile industry in India would be a joint venture. A joint venture can help your business grow faster, increase productivity and generate greater profits. A successful joint venture can offer:

access to new markets and distribution networks increased capacity sharing of risks and costs with a partner access to greater resources, including specialized staff, technology and finance

Joint ventures often enable growth without having to borrow funds or look for outside investors. It provides the opportunity to use joint venture partner's customer database to market the product, or offer. Joint venture partners also benefit from being able to join forces in purchasing, research and development. A joint venture can also be very flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting the commitment for both parties and the business' exposure.

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6. Recommendations:
India should look forward to create skill work force. They should invest more on Research and Development sector to enrich it. For automobile industry infrastructure is an important factor. So Indian policy maker should try to initiative to improve it. Currently India is facing inflation rate which does not match with their economy. Price of raw material is becoming unstable. Indian government should try to fix it. As automobile industry is a rising manufacturing sector Indian government should lower interest rate which is unfavorably high at this moment. Corruption in Indian politics is discouraging foreign companies to improve. Indian government should be aware of it and interested foreign companies should be careful about this factor.

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Sources:

www.bseindia.com www.googlefinance.com www.yahoofinance.com www.google.co.in www.moneycontrol.com www.worldfact.com www.rbi.org.in FDI statistic government of India India Central Statistical Organization Economic Times Indian automobile industry by T. P. Rajmanohar

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