ABSTRACT
This chapter discusses the aggregate trends in the auto industry. It summarises the recent trends in firm-level performance in automobile sector, with an attempt to draw contrasts between the domestic firms and those with some foreign equity/Foreign Direct Investment (FDI). The chapter analyses the recent trends in prices and links these with the recent FDI trends. Particularly in this era of trade liberalisation, World Trade Organisation and Free Trade Agreements (FTAs)/Preferential Trade Agreements (PTAs), it is essential to know the impact of FDI on overall performance and competitiveness of an economy. First, FDI was almost prohibited in this sector till 1993 and hence the effects of FDI are very conspicuous by now, making it easier to analyse the impacts of FDI flows. FDI has impacts on the supply chain of auto industry. Attempting to fill this gap, we analyse the impact of foreign investment on various dimensions of Indian auto industry that include both its performance as well as developmental implications.
