ABSTRACT
Chapter 6 extends empirical analysis by analysing the impact of foreign entry on the trade performance of the Indian passenger car industry. Analytically, it is expected that enhanced foreign presence would increase exports of the host country, owing to the edge in technology, international network and managerial and marketing skills. Analysis reveals an absence of any kind of relationship between foreign presence and export promotion in the case of India’s car industry either in the 1980s or 1990s. Rather than easing BoP constraints by bringing in more inflows of foreign exchange through exports, it added to the external vulnerability of the country since the gap between foreign exchange earnings and spending has widened by multiple times during the second half of the 1990s as compared to the previous years.
