This article makes an attempt to analyze the production trend of automobiles in India, between 1994-95 and 2005-06. It also addresses how the composition of various vehicle types has changed dramatically over the study period. Specifically, in the two-wheeler segment, Indian customers have exhibited a shift from scooter to motorcycles. The motorcycle segment enjoys the largest market share among the two- wheelers and has evidenced an exponential growth rate. In the prevailing economic environment, the overall growth prospect of the Indian automobile sector appears to be quite promising. The automobile sector has the opportunity to create employment and redistribute income and wealth so created. It has also the potential to generate huge employment opportunity in other key sectors of the economy through its strong forward and backward linkages. Keeping in view the growth potential, linkage effects and employment opportunity, a strategy needs to be formulated for the all-round development of this sector.

The automotive industry has emerged as an important driver in the Indian economy. Although the industry is nearly six decades old, until 1982, only three manufacturers, Hindustan Motors, Premier Automobiles and Standard Motors dominated the motor car sector. If we go back a few years, automobiles largely came in `twos'. In scooters, we had a Lambretta or a Vespa; in motor cycles, we had a Bullet or a Jawa; in cars, we had to choose between an Ambassador and a Fiat; in trucks, either Ashok Leyland or Tata; and in Tractors, either Swaraj or Mahindra. However, in 1982, Maruti Udyog Ltd. (MUL) came up as a government initiative in collaboration with Suzuki of Japan to establish volume production of contemporary models. After the lifting of licensing in 1993, 17 new ventures came up of which 16 were for manufacture of cars. The automotive industry currently accounts for nearly 4% of the GNP and 17% of the indirect tax revenue. It employs 4,50,000 people directly and 100,00,000 people indirectly and has now attracted most of the major global players.

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