ABSTRACT
India’s automotive industry witnessed considerable growth after the implementation of economic reforms in the 1990s. Almost all global manufacturers have started vehicle assembly or production in the country since 1991 and production figures have more than doubled since 2006 to almost four million passenger and commercial vehicle units in 2015 (Government of India 2006, 18; Government of India 2015). India’s passenger car and commercial vehicle industry became the sixth largest in the world in 2010, partly fuelled by the fact that its automobile market was the second fastest growing in the world after China (OICA 2015; The Hindu BusinessLine 2010). These figures establish India as an important global automobile production and market place and reflect several important and new trends since the 1990s. Overseas companies drove the growth of the industry to some extent, but several partly (Maruti Suzuki) or fully Indian-owned (Tata Motors, Mahindra & Mahindra) manufacturers are now among the world’s 30 largest producers of vehicles (OICA 2014). The growth of industry and private enterprise also had immense repercussions on the global importance of the country’s automobile industry. India became Asia’s fourth largest exporter of passenger cars after Japan, South Korea and Thailand (Nair 2009), and an important part in the global automotive supply chain with a strong position in ancillary production (ACMA 2015). Global financial capital and consultancy firms as well as foreign governments interested in export promotion increasingly regard India as an important automobile production and market place (KPMG 2010; Schade et al. 2012). In 2014, the industry was responsible for 7.1 per cent of India’s GDP, for 4.3 per cent of overall exports and for creating an additional 19 million jobs since 2006 (Government of India 2015, 1). The production of the cheap Tata Nano car from 2008 together with the promise of ‘universal car ownership’ for a growing consumer group including Indian lower middle class households showed how the automobile influenced both industrialisation and consumption (Chakraverti 2008), even if the Nano project turned out to be largely unsuccessful (Nielsen and Wilhite, this volume). Overall, these reports and figures reflect not only substantial industrial change, but also a new attitude of the government in pushing the industry and substantially increasing demand for automobiles from old and new consumer
classes. Being of comparatively recent nature, however, this trajectory of India’s automotive industry more or less suggests a sudden revolution with regard to automobiles in the realm of industrial manufacture, capital formation and consumer behaviour over the past two and a half decades. This view has also been the mainstay of the most recent research literature on the subject. It follows the assumption that the coming of international capital in the form of Japanese investments in vehicle manufacture in the 1980s was the decisive shift for the automotive industry and that the industry became substantial only after the 1990s economic reforms (D’Costa 2005). One reason for privileging these decades over earlier decades might be that the role and extent of industrialisation as well as its interplay with the private business sector in India after independence has not been thoroughly addressed and understood so far. Instead, the research literature on this period differentiates between industrial policies for large and small industries and their effect on large-scale and small-scale industrialisation (Tyabji 1980, 2015). However, this literature has not inquired if and where these industries came together, and only a few studies have looked at the automobile industry as a subject. Two studies that did so either explained the comparative lack of an indigenous automotive industry in India as a result of the unwillingness of Indian industrialists to come forth for automotive manufacture (Chibber 2003), or neglected political ideas around automobile manufacture and repercussions of the new industry on ancillary industrial development (Kathuria 1987). The previous discussion shows that the research literature has largely neglected the evolution of the automobile industry in the intervening period between independence and 1980. The research literature sees this earlier industrial legacy by and large as one of false planning objectives, dis-allocations of state and private investments and of stagnation in automotive manufacture. However, the early making of this industry cannot be studied without referring to the emergence of national plans and of several Indian companies for automobile manufacture. The literature has not only overlooked the specific environment in which this took place, but also whether and how this impacted ancillary industrial development and the economy more generally. However, these transformations were the product of a longer legacy of the automotive manufacturing sector roughly from the period after the Second World War, and were important in the making of an industry that saw yet another transformation in the 1980s and 1990s. Assumptions about the revolutionary impact of the 1990s economic reforms will therefore need to be revisited by looking at advances in automobile manufacture in the early planning period and how important the economic effects of the automobile industry on the Indian economy were in general at the time. This chapter analyses the emergence of the automotive sector as a key industry in mid-twentieth century India. Its main purpose is to highlight several specific contexts in this recent historical period in which automotive manufacture emerged and developed, and to bring to the general attention the fact that the larger history of automobile manufacture in India is under-researched. In doing
so, the chapter commences with a comparative approach to the automobile industry, which looks at the emergence of this industry and the idea of a key sector in industrialised countries, and why it emerged comparatively late and then did not take off to a larger extent in India. The second part of the chapter looks at how the Indian government and its planning apparatus addressed the automobile industry in the early post-independence period. National plans for automotive manufacture recurred on earlier plans that did not mature during the colonial period, and these plans tried to shut down foreign competition and increase in-house manufacture to boost the indigenous industry. This chapter is therefore not only concerned with why India’s automobile industry emerged comparatively late as a key sector. It also looks at the contexts in which it became a key sector in India and what its specific characteristics have been. The third part of the chapter shows how the industry developed in India in the short and medium run and how it affected several other sectors of the economy such as ancillary industrial units. The current literature particularly regards the initial plans for a small car project under Indira Gandhi and eventually the collaboration between Maruti-Suzuki in the production of the Maruti car as a turning point in the trajectory of automotive manufacture in India. This new collaboration did indeed start an entirely new phase in terms of capital investment and output capacity, but the automobile industry had a much longer historical trajectory with relevant repercussions that have been neglected so far. In particular the political contours and repercussions of industrial development at the local and regional level have been neglected so far. This part shows that despite a much smaller automobile industry compared with the US and Europe, specific localities and regions in India saw substantial new developments in automobile manufacture and with more wide-ranging repercussions on other sectors of the economy.
