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FDI in Retail will affects farmer?

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The Market

  • In last 25 years the Indian automobile industry has witnessed a huge change – from being a closed market to automatic approval of foreign equity of up to 100 percent.
  • With the de-licensing of this sector in 1993, global major Original Equipment Manufacturers (OEMs) including General Motors, Ford, Honda and Hyundai setup their shops in India.
  • Today India is one of the major two wheeler and commercial vehicle markets in the world.
  • Total number of vehicles sold including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers in 2009-10 was 12.29 million as compared to 9.72 million in 2008-09.
  • As per the Automotive Mission Plan 2006-16, the size of the Indian Automotive industry is expected to be over USD 120 billion by 2016.
  • India also has well developed, globally competitive Auto Ancillary Industry.
  • The Indian auto component sector has about 600 organized and over 6300 unorganized players.
  • Auto component manufacturers are gradually moving up the value chain with the share of supply to OEMs in total exports increasing. OEMs and Tier 1 companies accounted for 80 percent of export demand in 2008 as compared to a 35 percent in 1990.
  • India has an established automobile testing and R&D centers. Designing expertise in India has improved over the time. Global OEMs are now looking at outsourcing critical operation like auto design from India.
  • The Indian auto component industry is expected to grow to USD 33 billion to USD 40 billion by 2016.
  • The Investment Commission has set a target of attracting foreign investment worth USD 5 billion for the next few years to increase India’s share in the global auto components market from the existing 0.9 percent to 2.5 percent by 2015.


  • Growth in income levels and easy availability of financing options are driving the passenger car market.
  • Shrinking replacement cycle to boost passenger car market in India.
  • There is a rising demand for small and mid-size cars in India.
  • Though Compact and Mid-size segments driving the growth in the domestic market, Premium and Luxury segment are evolving at a faster pace.
  • Infrastructure spending is likely to boost the commercial vehicles market in India.
  • Competitive advantage arising out of low-cost advantage mainly on account of the availability of low-wage, proximity to Asian markets and lower shipments costs, makes India a sourcing hub and a manufacturing base for major OEMs.

Industry – Snapshot

Automotive Industry Auto Components
Size (2016 estimated) USD 120 – 159 bn USD 40 – 45 bn
Compounded Annual Growth
Rate CAGR (2006-2016)
13 Percent 14.2 Percent
Regulatory • 100 percent FDI under the automatic route
• Additional benefits if set up in a Special Economic Zone (SEZ)
• 100 percent FDI under the automatic route
Select foreign players in India General Motors, Toyota, Ford, Hyundai, Honda, Maruti Suzuki, Mercedes, Volkswagen, BMW, Renault, Nissan Delphi, Viseton, Bosch, Denso and Thyssen Krupp

Source: Automotive Mission Plan, 2016, IBEF, Investment Commission

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