Car Bonanza
Honda City thereafter, with Malaysias Proton not far behind. Already, both Daewoo and Hyundai are investing on a massive scale in giant car plants which will need a huge market. Does such a market exist?
It is odd that no one seems daunted by the forecast of the Association of Indian Automobile Manufacturers, which has lowered its sales expectation in the year 2000 by a lakh, or 15 per cent.
The Indian car buyer may get set for unexpected choice in terms of price and technology. But the picture is far from rosy from the car makers viewpoint. They seem determined to get a toehold in India despite there being no chance of earning good margins in the foreseeable future. The main logic behind this is the car companies determination to be present in the emerging markets of Asia and Latin America where most of the future growth is likely to be. A major crisis and shakeout in the global car industry are inevitable at some point down the line, but nobody is giving this any thought right now.
Indias automobile policy is similarly unconcerned about ground realities. The opening up has addressed the old problems of inadequate numbers and antediluvian technology. But there is no policy in place to tackle the problems of poor roads and high levels of urban auto pollution, or to provide proper public transport. Imports remain restricted by policy and through high tariffs, and this is partly responsible for the proliferation of tariff-jumping investment. The sensible option, which will prevent a repetition of the LCV fiasco, would be to allow imports. Domestic manufacture would then be on an economic basis.
The only worthwhile suggestion made recently is to allow Volvo to come in without any export obligation as it will be modernising the commercial vehicles sector which has not yet seen the technological upgradation that the car segment has seen. The CPI(M) has suggested that cars should be highly taxed as in Singapore but it is unlikely to agree to the corporatisation of public transport and the decline of union power there, with subsidy only at the margin and stringently controlled to reward efficiency.