Indian Automobile Industry: A study by StartBizIndia team of Corporate Professionals

1. Industry of the Month
“Automobile Industry in
India”
eBizWire
Vol. I Issue. VIII, September 2012
Insight
Biz India News 2
Biz Policy Updates 3
The Indian Automobile Industry 4
Business Idea of the Month 8
StartBizIndia Discussion Platform 9
Upcoming Business Summit 10
Contact us 11
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2. Biz India News Headlines
• On August 29, 2012, Automotive components maker Piolax India, a Japanese auto parts maker
subsidiary of Piolax of Japan, inaugurated its first Indian facility at the Sri City sets up unit at Sri City SEZ
multi-product special economic zone in Andhra Pradesh. The plant is slated
to commence commercial production shortly. Piolax is a global manufacturer
of auto parts such as industrial fasteners, coil springs, flat springs and
compact units. It has facilities in the US, the UK, China and Thailand.
Volkswagen to invest €100
• The Volkswagen Group aims to increase output by 10-15 per cent on a
million in India
€100-million investment at its production facilities in Aurangabad and Chakan
in Maharashtra. On September 06, 2012 John Chacko, Volkswagen Group
Chief Representative for India, said the investment would go towards minor
model changes and upgradation of the two factories. The funds will also
benefit Skoda and Audi’s domestic operations. The German automaker has a
1.3-lakh annual production capacity at Chakan, where it makes the Polo,
Vento and Skoda’s Fabia and Rapid models.
• On September 05, 2012, In a bid to ‘replicate the success’ of Israel in the Israel to set up 3 centres of
farm sector, the Gujarat Government plans to set up a farming educational excellence on farm tech in
institute in collaboration with Israel, offering post-graduation and Ph.D Gujarat
programmes with practical training and degree from Israeli universities.
• India and Pakistan will soon sign three agreements – on customs co- India, Pakistan to sign 3
operation, trade grievances redressal and mutual recognition, Commerce pacts soon to boost trade:
and Industry Minister Anand Sharma said on Tuesday. India and Pakistan Anand Sharma
will soon sign three agreements – on customs co-operation, trade grievances
redressal and mutual recognition, Commerce and Industry Minister Anand
Sharma said on Tuesday on September 05 2012.
Reliance Cement begins
• The production of cement from Reliance Cement Company Private Ltd, a
production from Butibori unit
subsidiary of Reliance Infrastructure Ltd (Reliance Infra), has begun from the
first manufacturing unit at Butibori, Nagpur in Maharashtra. On September
04, 2012, the unit would essentially meet the needs of the market in
Vidarbha, the company said in a communication to the stock exchanges.
• Storage technology software maker EMC has signed Netmagic Solutions for
design, architect and run its cloud computing infrastructure for Indian and EMC ties up with Netmagic
global companies. As a part of this tie-up, Netmagic will consolidate IT Solutions
infrastructure that is hosted on private or public cloud and consolidate it into
a hybrid cloud computing environment. On September 03, 2012, a hybrid
cloud environment helps in a mix and match of public and private IT
infrastructure that can be hosted and accessed as per their requirements.
• Four leading Chinese companies will visit Ahmedabad in September to
Leading Chinese companies
explore investment opportunities in Gujarat. The companies- Wuxi Xinje
Automation, Sunfar, Estun Automation and Zhejiang Chint Electric Co-are eye Greenfield projects in
Gujarat
eyeing investments in greenfield projects and partnerships in Gujarat. The
Chinese companies will meet entrepreneurs in Gujarat at a business
conference organized by India China Economic & Cultural Council (ICEC) on
September 12, 2012.
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3. Biz Policy Updates Legal Headlines
• RBI allows direct investment by Indian entities in Pakistan
• RBI allows direct
investment by Indian
On September 10, 2012.Reserve Bank of India has allowed Indian entities entities in Pakistan
to make direct investment in Pakistan, giving push for bilateral trade and
investments. It has now been decided that the overseas direct investment
by Indian Parties in Pakistan shall henceforth be considered under the
approval route, RBI said in a notification on Friday.
Reserve Bank of India has allowed Indian entities to make direct
investment in Pakistan, giving push for bilateral trade and investments.
It has now been decided that the overseas direct investment by Indian
Parties in Pakistan shall henceforth be considered under the approval
route, RBI said in a notification on Friday.
The move comes days after India allowed investment from Pakistan. RBI
said it will make amendments to the Foreign Exchange Management
(Transfer or Issue of Any Foreign Security) Regulations, 2004, to
incorporate changes. Bilateral trade between the neighbours stood at
about $3 billion and is expected to reach $6 billion in the next three years.
Earlier, Pakistan had expressed concern over certain issues related with
investments from India.
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4. The Indian Automobile
The Indian Automobile Industry Industry is broadly classified
into 4 categories:
Introduction:
Choices add the ultimate spice to life and India with the largest number of
people (well almost!) needs a lot of them. That is especially true when it
comes to things majorly characterized by the ever-evolving technology.
And obviously, when there’s a demand, there’s going to be a large
number of industry players competing with each other to bring out the
best possible product in a given price change.
One such industry is the Indian Automobile Industry which very visibly
stays on its toes to bring new models for the domestic and international • Two Wheelers form the
markets alike. The domestic players are sincerely trying to meet the major segment of Indian
international standards and yield the best quality. Industry with almost 75%
market share and hence
Nissan's Managing Director in India, Mr. Kiminobu Tokuyama says “India leaving all other segments
is a rapidly growing market, so therefore it is very important for global auto far behind. India forms the
manufacturers". India’s potential as a manufacturing country and as a prefect market for two
consumer base is being taken seriously all over the world. India is no wheelers because of huge
more just an information technology super power. A country which was population the major chunk
more or less ignored by the rest of the Asia, India is now becoming home of which is not urban class.
to several Asian brands owing to increasing opportunities and a
progressive economy. • Passenger Motor Vehicle
Segment consists of
With a turnover of almost $59 Million US Dollars, this industry provides Passenger Cars, Utility
employment to 13 million people in the Indian Work-class. This industry is Vehicles & Multi Purpose
one of the most competitive industries because the manufacturers face Vehicles.
some challenges like increasing fuel efficiency and reducing emissions
perpetually apart from doing something innovative on a continuous basis. • Commercial Vehicles &
Three Wheelers combined
have a market share of 9%
Indian Auto Market- Reasons to cheer: indicating that it’s the
households which are the
One of the largest automobile markets in the world, India has some major consumers in this
remarkable facts to its credit which make it World renowned. The Indian industry.
Auto Industry has a bright future because of several factors working
towards increasing demand for automobiles:
• The automobile industry is
1. Rapid Urbanization: Currently only 21% of the population lives in the one of the most
urban areas. Given how India is performing, the figures are hoped to competitive industries
touch 35% by 2020 and 40% by 2030. because the manufacturers
[Source: www.newgeography.com] face some challenges like
increasing fuel efficiency
2. Rising per capita GDP: The per capita GDP of India increased from and reducing emissions
1200 USD in 2011 to almost 1330 USD in 2012. This is further expected perpetually apart from
cross the 2000 mark by 2015. Increasing GDP would mean increased doing something innovative
purchasing power and hence increased demand for automobiles on a continuous basis.
[Source: www.tradingeconomics.com]
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5. The Indian Automobile Industry Statistics India
3. Overall growth of other industries: Industries are usually [Source: www.ficci-b2b.com ]
[www.ciiautoserve.in]
interdependent on each other. The effect of expansion of other industries
is bound to percolate to the automobile industry as well. Since transport is Largest Motorcycle Producer
a basic need of every industry, demand for automobiles will rise with in the World
every positive change in an industry. [Source: www.nasscom.org]
1
81% 2nd Largest Two Wheeler
0.8 Market in the World
0.6 49%
44% 42% Growth Rate
0.4 31%
21% Largest Three Wheeler
0.2
Market in the World
0 Source: ibef, SIAM, Nasscom
4. Car buyers getting younger: It is no more a hidden fact that India is
4th Largest Tractor Market in
one of the youngest countries in the world with a median age of almost 26
the World
years; much lower than the World’s biggest economies. It only shows that
the work class constitutes majorly of young individuals. The car buying
age has been on a decline. Where a person aged 39 used to buy a car in
the year 2000, this age has gradually come down to 33 in 2010. It is only
2nd Largest Scooter
expected to become lesser in the coming years.
Producer in the World
5. Growing Middle class: With the middle class of India growing
annually, benefits of this sector are still untapped. It is the transition from
the lower class to the middle class which converts car into a need from a 5th Largest Commercial
luxury. Vehicle Market in the World
Other factors like affordability, innovation, infrastructure facilities and price
of fuel also affect the demand for automobiles to a large extent. These
challenges keep the automakers on their toes all the time. With the middle 5th Largest Bus & Truck
class in India still growing annually, the benefits of this sector are still Market in the World
untapped.
Recent Developments in the Industry: [Source: www.ibef.org]
5th Largest Auto Producer in
• Ford India: In the wake of increasing petrol prices, it has the upcoming economies
expanded its diesel engine production capacity of its Chennai
plant to keep pace with the changing demand. The plant that had
the capacity to produce 2.5 Lakh engines annually in 2010; shall
10th Largest Passenger Car
now be able to produce 3.4 lakh engines. It also has the capacity
Market in the World
of producing 2 Lakh cars.
• Isuzu Motors Limited (Japan): With a capital outlay of Rs. 1000
Crores, it is planning to build a Greenfield project to target the
small commercial vehicle and MUV segments. 6th Largest Passenger
Vehicle Producer in the world
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6. Recent Developments in the
The Indian Automobile Industry Automobile Industry:
• Renault (French auto major): By launching it midsize SUV
 Ford India
‘Duster’ in both petrol and diesel variants, it has successfully
entered the Indian SUV market. Renault has already launched 3
 Isuzu Motors Limited
more vehicles this year prior to this.
(Japan)
• M&M Group: M&M Group after spending 4 years in the Indian 2  Renault (French auto major)
wheeler segment has launched its research and development
(R&D) center for two-wheelers in Pune with an investment of Rs  M&M Group
100 Crores.
 MSIL (India’s largest auto
• MSIL (India’s largest auto maker): It shall merge the group unit maker)
“Suzuki Powertrain India Ltd” with itself so that all the diesel
manufacturing facilities are under the same management. The
merger will be conducted through share swap without any cash
transaction.
Prominent Players in the Indian Automobile Industry:
India has some
These are the names which have a brilliant Pan India coverage. Apart commendable players in the
from this, there are brands which dominate a particular region of the automobile sector. The
country depending on their popularity in that area. This can be studied market shares of the major
from the following picture: automotive companies at the
end of May 2012 looked
something like this;
(Source: SIAM)
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7. The Indian Automobile Industry
Foreign Direct Investment Policy
A policy of automatic approval up to 100% FDI has been a boon for the
Industry. The policy alone has led to a turnover of 12 billion USD in the
Indian auto industry. No need for licensing and no restriction on import of
auto components make this sector very attractive for foreign investors.
Apart from this, advanced technology yet cost effectiveness and efficient
manpower add to the list of advantages which India offers as a target
country for investment.
With a lot of foreign players like General Motors, Toyota, Renault, BMW,
etc. already carrying out their activities successfully in India, FDI has
definitely contributed to the growth story of the Indian auto Some Companies in
Automobile Industry in
The Future Forecast: India
The future of Automobile Industry is so promising and cheerful that if the
statistics go as estimated, then, the share of Indian exports in the Global
auto market will almost triple in the years ahead. The overall automobile
production in India would expand by 9.6 per cent in 2012-13. The
Passenger Vehicle Market of India will sell almost 5 million vehicles by
2017-2018. The Indian Auto Exports will also grow and cross the 17 billion
USD mark by 2015-2016.
And, there are factors which are demand determinants playing in favour of
the Indian automobile Industry like rising family Income, product innovations,
demographics and favourable duty structure; there is a lot which the industry
is yet to see.
The future looks bright and being an entrepreneur, if someone is looking for
opportunities in this Industry, anything creative/ innovative related to the
automobile industry is bound to work.
(Source: SIAM, ACMA, FICCI and CIME)
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8. Business IDEA OF THE Month
CarExchange.com
From dreaming about buying a superfast car to actually
experimenting with it during the teenage; from buying a swanky
car for the first time from your own salary to buying a big enough
and safe car when you finally have a family of your own; it is the
same story for all. And now, with the number of independent girls
on the rise, the car story for them is pretty similar too. No wonder,
a car is always one of the first things in everyone’s list of must-
haves.
But, actually having a car; new, rented or second-hand is a
separate story in itself. The whole process of choosing a car,
finding the appropriate dealers, negotiating and finalizing a deal
and everything else that follows surely; is a cumbersome process.
What would you choose? Calling up and meeting each suitable
vendor individually on your own? Or logging on to a website that
provides all information at one place? So that the only thing that
you need to do is choose the best deal and make a final call.
Well you know what we are hinting at. If you are tech savvy, know
the importance of a good and interactive website and are a car
lover; you have an interesting opportunity at hand. Taking cue
from e-commerce based portals; you can create a similar website
giving various details like: Different types of cars and their
variants; the authorized company dealers and other vendors for
selling & reselling of cars, individuals interested in purchase or
sale, etc. The main idea is to create an online car bazaar so that
you can bring the buyers and sellers together and facilitate trade
between them. Such a website will give people a one stop solution
to all their car woes. What more? You can even add information
about various service stations for after sale requirements and
publicize attractive service packages offered by them.
For starting this; you will have to register your business entity, get
a web domain registered which shall cost you anywhere from Rs.
500 and up for a year, hire a web designer for your website,
collect the database of all the information you decide to put on
your portal and tie up with a payment gateway like PayPal on your
website. Last but not the least! Marketing! Everything done, your
business will depend on this one magic word. To attract people
you have to let them know first of all.
You can go a step forward by including car accessories in the list
of offerings. Keep updating regularly and add special features like
latest car news for the car enthusiasts and you should be ready to
keep this business going.
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9. StartBizIndia Discussion Platform
Mr. Jhunjhunwala is a businessman who wishes to set up an industrial
unit in Gujarat, India. He has a successful retail business which he has
run for 20 years and wishes to transfer to his sons. This however is
also the reason that he does not know how to go about an industrial
set up. What all approvals should he be looking for?
A. Industrial settings are broadly classified into 4 categories in our country.
Depending on the kind of set up, one has to seek the relevant industrial
approval from the relevant authority.
• For setting up an SME, an Entrepreneurship Memorandum is
required to be filed with the District Industries Centre for approval.
• For an industrial undertaking that is not an SME but also does not
require a compulsory license; then an Industrial Entrepreneurship
Memorandum shall be filed with the Secretariat for Industrial
Approval (SIA)
• For enterprises falling under the compulsory licensing list, a letter of
Intent (LOI) is required to be filed with the SIA in a prescribed form.
• If one wishes to set up a 100% Export Oriented Unit (EOU) or an
SEZ unit, then an application in the prescribed form has to be filed
with the Development Commissioner, KASEZ
However, setting up of a business requires taking care of a lot of aspects.
Various other approvals that are required for an industrial set up are as
follows:
Registering the Business Entity:
• Registration with the Registrar of Firms is required if you choose to
have a proprietary concern or a Partnership firm
• The Registrar of Companies handles applications for forming of a
Company or a Limited Liability Partnership (LLP)
Approvals for the Land:
Again the approvals will depend on the type of land sought.
• For allotment of plot in an Industrial estate, approval from the
Gujarat Industrial Development Corporation (GIDC) is required.
• The District Collector shall approve any applications for allotment of
Government Land.
• Agricultural land can be purchased through negotiation for which no
approval is required per se.
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10. Upcoming Business Summit
International
 Indian Home Congress 2012
India’s first of its kind of show on Home Décor, Home furnishing, and
Home Improvement Sector. • Auto Show India 2013
Date: - October 04, 2012 to October 05, 2012
Venue: - Hotel Claridges, Surajkund, Delhi/NCR
Forthcoming Auto Industry related Events
[Source: www.siamindian.com]
 Auto Show India 2013
With India emerging as a leading export hub for automobile companies
and Sri Lanka coming up as a an important country for business
opportunities in the automobile sector for India; this second edition of the
Auto Show India organized by the Society of Indian Automobile
Manufacturers aims to establish good relations with the Automotive
market of Sri Lanka. The show will feature the latest vehicle models and it
is hoped that this edition will see far more visitors than the last time.
National
Date: - January 04, 2013 to January 06, 2013
Venue: - Bandaranaike Memorial International Convention Hall (BMICH), • Indian Home Congress
Colombo, Sri Lanka
2012
 Bus & Utility Vehicles Show 2013
Considering the importance of buses in the country and the fact that the
Indian bus industry is one of the largest in the world; SIAM is organizing
the Bus & Utility Vehicles Show 2013. Given the situation when utility • Bus & Utility Vehicles
vehicles are rapidly seeing a lot of takers whether it is an SUV or an MUV; Show 2013
this show will focus on showcasing the latest developments in the
technology and provide a platform for manufacturers to launch their
product and communicate with the prospective customers directly. This
will help the manufacturers understand the requirements of the target
audience better.
• Motor Show Bangalore
Date: - February 14, 2013 to February 17, 2013
Venue: - India Expo Mart, Greater Noida, Delhi-NCR, India 2013
 Motor Show Bengalore 2013
A show first of its kind, it is being organized to help automobile
manufacturers to present latest technology developments, innovations in
designs and features, latest products, etc to prospective customers. It is
not unknown that this city is the technology centre of India and one of the
most financially sound cities too. With a large pool of young working
population, Bangalore is definitely bound to benefit from the show.
Date: - April 04, 2013 to April 07, 2013
Venue: - Bangalore International Exhibition Centre (BIEC), Bangalore
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11. Contact Us
Neha Seth Visit us at
E: neha@indiacp.com
D: +91.11.40622239
A Venture of
Shipra Paul
D- 38, Ist Floor, South Extn. Part I New Delhi –
E: shipra@indiacp.com 110049
D: +91.11.40622246 T: 40622200 F: 91.40622201
E: info@startbizindia.com
Disclaimer:
This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper have
been developed for the new startups. The author and the Company expressly disclaim all and any liability to any
person who has read this paper, or otherwise, in respect of anything, and of consequences of anything done, or
omitted to be done by any such person in reliance upon the contents of this paper.
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