MY PROJECTS: 2015

A STUDY ON THE PERFORMANCE ANALYSIS OF AUTOMOBILE INDUSTRY IN INDIA

DISSERTATION

Submitted in partial fulfillment of the requirement

For the award of the Degree of

BACHELOR OF BUSINESS ADMINISTRATION

UNIVERSITY OF CALICUT

SHABEERALI P M

6^TH SEMESTER B.B.A

Reg. No.: GTAMBBA045

UNDER THE GUIDANCE OF

SRI.ELDHOSE

ASSOCIATE PROFESSOR

(UG DEPARTMENT OF COMMERCE AND MANAGEMENT)

UG DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES

SRI.C.ACHUTHAMENON GOVERNMENT COLLEGE

THRISSUR-14

2014-2015

CERTIFICATE

This is to certify that the project report titled “A STUDY ON THE PERFORMANC ANALYSIS OF AUTOMOBILE INDUSTRY IN INDIA” is a bonafide record of the project carried by SHABEERALI P M under the supervision and guidance in partial fulfilment of the requirement for the award of the Degree of Bachelor of Business Administration of the University of Calicut.

Countersigned

DECLARATION

I SHABEERALI P M, do hereby declare that this project report “A STUDY OF PERFORMANCE ANALYSIS OF AUTOMOBILE INDUSTRY IN INDIA” is a bonafide record of the work done by me during the course of project and that the report has not previously formed the basis for the award of any degree, diploma, fellowship, associate ship or other similar title of recognition of any university or institution.

I further declare that this project report is submitted on partial fulfilment of the requirement for the award of the degree of BBA from University of Calicut.

Place:

Date: SHABEERALI P M

ACKNOWLEDGEMENT

I owe my sincere gratitude to T.R.NARAYANANKUTTY, Principal and Prof. U.S MOHANAN Head of the Department of Commerce and Management Studies, Sri.C.Achuthamenon Govt. College, Kuttanellur, for providing all the facilities in the college

I render my heartfelt thanks to Prof. ELDHOSE, Assistant Professor Dept. of Commerce and Management Studies, Sri.C.Achuthamenon Govt. College, Kuttanellur for his valuable guidance and supervision throughout the preparation of this project report. I am also thankful to all my professors and lecturers for their dear support.

I would like to extend my gratitude towards my friends and family members especially my father and mother for their unique support and creative suggestions.

SHABEERALI P M

INDEX

SI No.	TITLE	*Page no.*
*CHAPTER-1*	*Introduction* *Statement of problem* *Importance of the study* *Objectives of the study* *Methodology* *Limitation* *Chapter scheme*
*CHAPTER-2*	*Theoretical frame work* *Meaning of automobile industry* *Industry definition* *History of Indian automobile industry*
*CHAPTER-3*	*Data analysis and interpretation*
*CHAPTER-4*	*Findings* *Suggestion* *Conclusion* *Bibliography*

LIST OF TABLES

TABLE No.	NAM EOF THE TABLE	PAGE No.
3.1	Gross Turnover Trend
3.2	Production Trend
3.3	Sales Trend
3.4	Comparison of production and sales
3.5	Domestic Market Share
3.6	Export Trend
3.7	Level of Taxes

LIST OF FIGURES

FIGURES No,	NAME OF THE FIGURES	PAGE No.
2.1	Evaluation of Indian Automobile Industry
3.1	Gross Turnover
3.2	Production
3.3	Sales
3.4	Comparison of Production and Sales
3.5	Domestic Market Share
3.6	Export
3.7	Level of Taxes

CHAPTER-1

INTRODUCTION

THE PERFORMANCE ANALYSIS OF AUTOMOBILE INDUSTRY

INTRODUCTION

Automotive industry is the key driver of any growing economy. It caters to the requirements of equipment for basic industries like steel, non-ferrous metals, fertilizers, refineries, petrochemical, shipping, textiles, plastic, glass, rubber, capital equipment, logistics, paper, cement, sugar, etc. . . .It facilitates the improvement in various infrastructure facilities like power, rail and road transport.

The automotive industry comprises automobile and auto component sectors. , It includes passenger cars, light, medium and heavy commercial vehicles; multi- utility vehicles such as jeeps, scooters, motor cycles, three-wheelers and tractors and auto components like engine parts, drive and transmission parts, suspension and braking parts, and electrical, body and chassis parts.

The Automobile industry in India is one of the largest in the world and one of the fastest growing globally. India’s passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three
million units in the course of 2011-12. in 2009, India emerged as Asia’s fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.

As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 61.1 million vehicles on the nation’s roads.

The majority of India’s car manufacturing industry is based around three clusters in the south, west and north. The southern cluster near Chennai is the biggest with 35% of the revenue share. The western hub near Maharashtra is 33% of the market. The northern cluster is primarily Haryana with 32%. Chennai, is also referred to as the Detroit of India with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60% of the country’s automotive exports. Gorgon and Manesar in Haryana form the northern cluster where the country’s largest car manufacturer, Maruti Suzuki, is based.

The Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors, Volkswagen, Skoda, Mahindra and LM ahindra, Tata Motors, Mercedes Benz, Land Rover , Fiat and Force Motors having assembly plants in the area. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster.

Another emerging cluster is in the state of Gujarat with manufacturing facility of General Motors in Halol and further planned for Tata Nano at Sanand. Ford, MarutiSuzuki and Peugeot-Citroen plants are also set to come up inGujarat.Kolkata with HindustanMotors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country.

The Indian Automobile Industry manufactures over 11 million vehicles and , exports about 1.5 million each year. The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has a turnover of more than USD $35 billion and provides direct and indirect employment to over 13 million people. The supply chain is similar to the supply chain of the automotive industry in Europe and America. Interestingly, the level of trade exports in this sector in India has been medium and imports have been Low. However, this is rapidly changing and both exports and imports are increasing.

The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all, the advantages of this sector in India are yet to be leveraged.

With a high cost of developing production facilities, limited accessibility to new technology, and increasing competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.

The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently,
India’s increasing per capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major role in the rise and competitiveness of the industry.

Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market.

Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy.

The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India.

Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles.

STATEMENT OF PROBLEM

The automobile industry of our country is of a very high scale, so that the growth of the automobile industry has a direct impact on the economy of our country. This project comprises of the various means by which the economy is affected by the growth of automobile industry. Motor vehicle tax constitutes about 6.4% of the total tax revenue of the country. The revenue from automobile exports and domestic production and sales contributes to the GDP of the country as well. Indi&s automobile exports have grown consistently and reached $4.5 billion in 2009, and is expected to cross $12 billion by 2014.

As India’s economy continues to grow at a rapid pace, the automobile industry will be a key beneficiary. This is widely true across automotive markets—from those serving customers with two-wheelers and four-wheelers to those offering commercial vehicles. This Booz & Company Perspective provides an analysis of growth prospects in the Indian automotive industry. The main factors behind such growth are the increasing affluence of the average consumer, overall GDP growth, the arrival of ultra-low-cost cars, and the increasing maturity of Indian original equipment manufacturers (OEMs). However, India’s path to mass motorization will be very different from that of developed countries; it must first develop the new technologies, business models, and government policies that will pave the way to increased automobile penetration

By this project I am trying to prove the impacts or benefits of automobile industry growth on our country’s economy. And how the changes in automobile industry can make change in economy, in other words to prove the relationship between the automobile industry and Indian economy.

IMPORTANCE

The automobile sector is growing at very large rate in the whole world. India have a very big share in the growth of this sector. India’s passenger car and commercial vehicle manufacturing industry is the seventh largest in the world. This growth is not a small thing for a developing country like India. Such growth will surely create an impact on the Indian economy. Here came the importance of the topic impact of automobile industry growth on Indian economy.

OBJECTIVES

The main objective of the project is to have a “Study on the growth of automobile industry in India”

Ø To find out the different types of revenue from automobile industry to
Indian government.

Ø To know about the automobile production, sales, export etc in our country.

Ø To find out the growth of Indian automobile industry.

Ø To know about the tax revenue from automobile.

Ø To know about the future plan of automobile industry

METHODOLOGY

1.COLLECTION OF DATA.

A. SECONDARY DATA.

2. ANALYTICAL TOOLS.

A. PERCENTAGE METHOD.

B. BAR DIAGRAM.

C. PIE CHART

D. LINE CHART

SECONDARY DATA

It is the data that collected from different that are already collected or
published. Data needed to this project is collected from different published
sources like magazines, news papers, internet etc.

ANALYTICAL TOOLS

(A) PERCENTAGE METHOD
All the collected data are classified and tabulated on percentage basis. The variables are given a certain percentage value in accordance with response from
selected students.

(B) BAR DIAGRAMS

One dimensional or bar diagrams are mainly used for the study. These are the most common type of diagrams used in practice. They are readily understood and are the simplest and easiest to make. In this study simple bar diagrams are mainly used.

(C) PIE CHARTS

This type of diagram is used to show the break up of a total into component parts. The chart is so called because the entire graph looks like a pie, and the components resemble cut from pie. Lot of pie charts are used in this study.

(D) LINE CHART

A representation of an electrical system by means of single lines and graphs symbols showing the major components of the system

LIMITATIONS

Ø Less availability of current data.

Ø My topic is covering a very vast area so that more time is needed to collect more data. Time was limited for this dissertation.

Ø Checking the reliability of some data available for doing this dissertation was not easy because of depending on internet and magazines.

Ø Collection of current data was not possible in some cases.

Ø Lack of experience for doing a dissertation that covers a vast area.

Ø It is very difficult to prove that the revenue earned from automobile industry is correctly utilized for the country’s development.

CHAPTER SCHEME

The book contains comprehensive study of the impact of automobile industry growth on Indian economy . This book has been divided into four chapters.

Chapter 1: It deals with introduction, importance, objectives, and limitations of the study. It contains methodology part which explains the method used in the study.

Chapter 2 : It deals with some theoretical aspects about the automobile industry. Its meaning, definition, history etc of automobile industry and also the history of Indian automobile industry

Chapter 3: It forms the core of the study made, and it deals with the analysis and interpretation of data collected from different sources and it is done by using tables and graphs.

Chapter 4: It discusses the findings, suggestions and conclusion.

CHAPTER-2

THEORETICAL FRAME WORK

THEORATICAL FRAMEWORK

AUTOMOBILE INDUSTRY - MEANING & DEFINITION

The business of producing and selling self-powered vehicles, including passenger cars, trucks, farm equipment, and other commercial vehicles. By
allowing consumers to commute long distances for work, shopping, and entertainment, the auto industry has encouraged the development of an extensive road system, made possible the growth of suburbs and shopping centers around major cities, and played a key role in the growth of ancillary industries, such as the oil and travel businesses. The auto industry has become one of the largest purchasers of many key industrial products, such as steel. The large number of people the industry employs has made it a key determinant of economic growth.

INDUSTRY DEFINITION

This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines.

Products and Services

The primary activities of this industry are:

Motor cars manufacturing Motor vehicle engine manufacturing

The major products and services in this industry are:

Passenger motor vehicle manufacturing segment (Passenger Cars, Utility Vehicles & Multi Purpose Vehicles) Commercial Vehicles (Medium & Heavy and Light
Commercial Vehicles) Two Wheelers Three Wheelers

INDUSTRY HISTORY

Although ancient Chinese writers described steam-powered vehicles, and both steam- and electric-powered cars competed with gas-powered vehicles in the late 19th cent. Frenchman Jean Joseph Etienne developed the first practical internal-combustion engine (1860), and later in the decade several inventors, most notably Karl Benz and Gottlieb Daimler, produced gas-powered vehicles that ultimately dominated the industry because they were lighter and less expensive to build. French companies set the design of the modern auto by placing the engine over the front axle in the 1890s and U.S. manufacturers made important advances in the mass production of the auto by introducing cars with interchangeable machine-produced parts (one such car was created by Ransom E.Oldsin 1901).

In 1914 Henry Ford began to mass produce cars using assembly lines. In addition, his practice of providing loans to consumers to buy cars (1915) made the model-T affordable to the middle class. In the 1 920s, General Motors further changed the industry by emphasizing car design. The company introduced new models each year, marketed different lines of cars to different income brackets (the Cadillac for the rich; the Chevrolet for the masses), and created a modern decentralized system of management. U.S. auto sales grew from 4,100 in 1900 to 895,900 in 1915, to 3.7 million in 1925. Sales dropped to only 1.1 million in 1932 and during World War II, the auto factories were converted to wartime production.

THE MODERN INDUSTRY

After 1945, sales once again took off, reaching 6.7 million in 1950 and 9.3 million in 1965. The U.S. auto industry dominated the global market with 83%
of all sales, but as Europe and Japan rebuilt their economies, their auto
Si ndustries grew and the U.S. share dropped to about 25%. Following the OPEC
oil embargo in 1973, smaller, fuel-efficient imports increased their share of the U.S. market to 26% by 1980. In the early 1980s, U.S. auto makers cut costs with massive layoff. Throughout the 1 990s, imports—particularly from Japan—took
an increasing share of the U.S. market.

Beginning in the early 1980s, Japanese and, later, German companies set up factories in the United States; by 1999, these were capable of producing about 3 million vehicles per year. As a result, the three big U.S. auto makers now produce less than two thirds of the cars sold in America. In the early 1990s, over $140 billion worth of motor vehicles and parts were produced in the United States by companies employing more than 210,000 workers. Complaints about auto pollution, traffic congestion, and auto safety led to the passage of government regulations beginning in the 1970s, forcing auto manufacturers to improve fuel efficiency and safety. Auto companies are now experimenting with cars powered by such alternative energy sources as natural gas, electricity, and solar power.

HISTORY OF INDIAN AUTOMOBILE INDUSTRY

The first car ran on India’s roads in 1897. Until the 1930s, cars were imported directly, but in very small numbers. Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under license from Willys. The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.

Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry.

However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.

In the 1980s, a number of Japanese manufacturers launched joint-ventures
of or building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.

Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased
competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India’s robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000 units and has since grownrapidly to a record monthly high of 182,992 units in October 2009. From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example) this progression is unlikely to stop in the coming decade. Congestion of Indian roads, more than market demand, will likely be the limiting factor. SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and international, in India.

VISION

“ To emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 Billion accounting for more than 10%of the GDP and providing additional employment to 25 Million people by 2016 ”

EXIM POLICY

1. Credit of embedded tax

SIAM had got a study done through ICRA Advisory Services to estimate the cascading impact of embedded tax in manufacturing vehicles in India for which no set-off is available under any scheme.

ICRA looked at two states, Maharashtra and Tamil Nadu, which have automotive hubs and had estimated in July 2003 that the quantum of embedded tax amounts to around 12% of manufacturing cost.

Since this makes our vehicles less competitive by 12% in the international markets, SIAM suggests that any export incentive scheme offered to the exporters should factor this in the total value of credit. This should be in addition to the Drawback/DEPB for actual import duty suffered on raw material and component.

DEPB Scheme should be extended for at least two years till the internal reforms are done.

2. Drawback for 2% education CESS should be admissible for claim

Presently the import duty structure is as under
a) Basic Custom Duty
b) CVD in lieu of Excise Duty + 2% CESS on CVD
c) 2% CESS on total Duty (a+b)

CVD and 2% CESS on all imported items are refunded as CENVAT credit. When the imported input is used for export production, basic duty is refunded as drawback. However, 2% CESS on total Duty remains non-CENVATable / refundable.

Since all duties on inputs stage are neutralised by way of drawback and or under licence route, the 2% CESS on total duty should also be refunded as drawback.

3. Brand Rate Fixation

Effective from 1st April 2003 - the authority for fixation of drawback delegated to jurisdictional central excise authorities. The central excise authorities are raising several points while verifying the data/fixing the brand rate.

Further all the rules concerning to fixation of brand rates are formulated by the drawback department, Ministry of Finance. For any clarification on these issues the central excise has to refer the matter again to the Ministry. There are problems which the Exporters are facing with the Central Excise Authorities - which is causing delay in fixation of brand rate.

It is suggested that the choice should be given to the exporter to get the brand rate settled from Ministry of Finance as was earlier done under Simplified Drawback Scheme.

4. Export Obligations under EPCG Scheme

Past exports average performance without EPCG licence should not be counted for imposing obligation on new EPCG licences.

5. Export under bond to Nepal & Bhutan

Currently the customs authorities do not entertain any refund of duty on exported to Nepal and Bhutan if the payment is other than Letter of Credit (L/C).

Payment terms such as TT / cheque, DD or Bank Guarantee may be allowed as applicable for export to other countries.

6. Despatch of Documents to overseas parties

Currently despatch of documents to overseas parties is allowed only through banks. This is a time consuming process and entail handling charges.

Wherever the payment is coming in advance the exporter be allowed to send documents directly to the party instead of routing through the banks.

7. Rejected material sent back to shipper by importer of repute

Customs should not insist on physical verification of rejected material sent back by importer of repute, under section 74 of Customs Act.

Customs may verify the export shipment with the incoming new import shipment for ensuring that the part being sent back is identical with the imported part. e.g. 100 pcs of Part A were imported by importer of repute and cleared from the Customs. When parts were examined at the factory it was found that 90 pcs of Part A are acceptable and 10 pcs of Part A are rejected.

Importer of repute will instruct the shipper to send replacement of 10 pcs of Part A on free of charge basis. On getting free replacement, importer of repute will process the documents under section 74 for these rejected 10 pcs of Part A for sending it to the shipper. At the time of export examination, to verify the physical identification of the material, Customs should examine the new import consignment of importer arriving at port/airport for Part A. On getting convinced that Part A being sent back is identical with the new imported Part A (except that earlier was rejected on quality ground), customs should allow clearance of the export shipment under Section 74 and should process the refund of duty.

8. Simplification of Notifications

Notifications issued by Departments should be minimum & user friendly. From the subject itself the user should get the theme of the notifications.

9. Interest on duty foregone under duty exemption schemes

The Exim Policy provides import of Capital Goods, raw materials, components, consumables etc. either under concessional duty rate or at zero duty for carrying out manufacturing activities with time bound export obligations.

Due to some unavoidable changed circumstances, if the importer is not able to fulfill the obligation, then importer needs to regularise the imports on payment of duty + interest @ 15% p.a.

Under the prevailing market conditions, the ruling interest rate is in the range of 6% to 8% p.a for all types of transactions. To reduce the burden and to bring down the transaction cost, the interest rate for regularisation of imports need to be plugged max. @ 10% p.a. Exporters who undertake the business risks can survive during uncertainties.

10. Self Assessment for Imports

Excise and Sales tax rules provide opportunity to the assessee to assess the duty and pay to the government periodically. Only audit check is done on post payment activities. Government need to come out with such self assessment schemes which will enable importer to move the goods from the ports on arrival and pay duty on self assessment basis. Customs can introduce Audit checks to check adequacy similar to excise and sales tax.

The above will help better utilization of scarce and expensive port facility and reduce the transaction costs.

The facility needs to be extended for import clearances also. Indian Port Authorities to look up global standard of operations and eliminate multiple handling and improving the port productivity levels.

11. Export benefits like DEPB /DGFC / Advance License

The above export incentives are admitted only for exports against Hard Currency and denied for Rupee trade. As a result Rupee trade with neighbouring countries are less attractive and as a result full potential is not realised. This also affects our competitiveness vis-à-vis other countries in these markets. The above export Incentives need to cover export under rupee trade also, especially with SAFTA being negotiated currently.

12. Tools Imported For Specific Activity

Calibration equipments and tools brought by Overseas technicians / specialists for erection, commissioning and serving of equipments supplied , imports made on re-export basis is liable for Customs duty.

At present the provision is to pay customs duty and claim duty draw back under Section 74. The process is cumbersome and takes long lead time. Needs provision to custom clear against bond an cancellation after re-export

Imports in advance or as baggage be permitted without duty on condition of re-export.

13. Advanced Technology Has Demerits

Imports under CTH 49.11 attracts Nil duty if imported in Hard copy form. However, if the same is imported in the form of CD, Customs duty is applicable. The anomaly needs to be removed Manuals, drawings et covered under scope of CTH 49.11 if imported in CD ROM, customs duty to be exempted

14. Duty Free Credit Entitlement Licence

Licensing authorities are issuing DFCE licence for service providers served from India as per para 3.6.4.1 of Foreign Trade Policy 2004-09, which is cover under Customs Notification 54/2003-cus dated 01-04-2003.

15. TARGET PLUS Scheme

Even though Target Plus Scheme is announced in the Foreign Trade Policy 2004-09 on 31-08-2004, the Application form - Appendix 17D is yet to be provided by the Licensing Authority. Dept of Revenue is required to issue Customs Notification for the same, with a provision that CVD paid by cash at the time of importation, by the Status Holder is eligible for CENVAT Credit as mentioned in the Foreign Trade Policy Para 3.7.7.

16. Conditions of Import of Vehicles

The existing conditions of import of new and used vehicles should be retained as such.

EVALUTION OF INDIAN AUTOMOBILE INDUSTRY

EFFICIENCY FACTOR

CHAPTER-03

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

INDIAN AUTOMOBILE INDUSTRY: AN ANALYSIS (2005-2011)

The automotive Industry in India is now working in terms of the dynamics of an open market. Many joint ventures have been set up in India with foreign collaboration, both technical and financial with leading global manufacturers. Also a very large number of joint ventures have
been set up in the auto-components sector and the pace is expected to pick up even further. The Government of India is keen to provide a suitable economic, and business environment conducive to the success of the established and prospective foreign partnership ventures. $5.7 billion is the investment envisaged in the new vehicles projects. The market research report ‘Indian Automobile Industry - An Analysis (2005-20 11)’ clarifies all doubts regarding sales satisfaction index and customer satisfaction index. With the inclusion of initial quality study, and the Government policy and competitive analysis, this report in itself is a complete guide to the producers and consumers in the auto industry.

Gross turnover of automobile industry in India

(CONVERSION RATE RS.50= 1USD)

Year	IN USD MILLION
2008-2009	36612
2009-2010	33250
2010-2011	43296
2011-2012	58583
2012-2013	66264
2013-2014	67607

TABLE.01

FIG: 01

INTERPRETATION

By the analysis of this graph we can see that, from the year 2008-09 the gross turnover was 36612 and in the next year turnover shows a rapid decrease. In the year 2010-2012 shows the highest gross turnover of automobile industry in the country . In these turnover has increased from 43296 to 58583. In this turnover there is an slight increase from the year 2012-14 in these years the gross turnover has an increase from 66264 to 67607 ( USD Million ).In this turnover have a only one decreasing trend in the year 2009 to 2010 has 33250( USD Million). But the next years shows high changes in growth. In this turnover has decreased in high rate from 36612 to 33250(USD Million) in the year 2008 to 2010.Even though the growth rate is decreased but the turnover is always increasing every year as we can see in this graph.

AUTOMOBILE PRODUCTION

When we analyze the growth of automobile industry we have to consider the automobile production in the country. Here I am presenting the data of automobile production in India between the years 2008 to 2014. In this data the total production is derived from totals of heads like passenger vehicles, commercial vehicles, three wheelers, and two wheelers. And the total production is also shown in this table. The graph is prepared on the basis this total production.

PRODUCTION TREND

Category	2008-09	2009-10	2010-11	2011-12	2012-13	2013-14
Passenger vehicle	1838593	2357411	2982772	3146069	3231058	3072651
Commercial vehicle	416870	567556	760735	929136	832649	698864
Three wheeler	497020	619194	799553	879289	839748	830120
Two wheeler	8419792	10512903	13349349	15427532	15744156	16879891
Grand total	11172275	14057064	17892409	20382026	20647611	21481526

FIG: 02

INTERPRETATION

By the analysis we can say that there is almost an increasing trend in automobile production. The production of automobile are increasing year to year. In this trend shows the highest production rate from the year 2009 to 2011. In these year the production trend has an increased from 14057064 to 17892409 (USD Million) .In this production trend says that the two wheeler is the most or high produced vehicle compared from other vehicles. In India the automobile industries are highly produced the two wheeler vehicle. And the second position got to passenger vehicle. In this trend we can see that the production of commercial vehicles and three wheeler are decreased from the year 2011 to 2014.

AUTOMOBILE SALES

Profit and loss of an industry is based on production and sales in that industry. So when we consider the production in automobile industry we have to consider the sale of these produced unit. The next table shows the sales of automobile from 2008-2014.

SALES TREND

Category	2008-09	2009-10	2010-11	2011-12	2012-13	2013-14
Passenger vehicle	1552703	1951333	2501542	2629839	2665015	2503685
Commercial Vehicle	384194	532721	684905	809499	793211	632738
Three wheeler	349727	440392	526024	513281	538290	479634
Two wheeler	7437619	9370951	11768910	134091501	3797185	14805481
Grand total	97242431	12295397	15481381	138044120	7793701	18421538

TABLE.03

FIG:03

INTERPRETATION

By the analysis of the graph we can see that the passenger vehicle is increased from the year 2008 to 2013. But its next year onwards it shows an decreasing trend. The sale of commercial vehicles are increased from 2008 to 2012. But after these years the sale trend go to decrease. So now a days the sale of commercial vehicle are decreasing . In the sale of three wheeler; These trend shows the wave trend , Because the sales are changed in every year . The sale of two wheeler is only decreased in the year 2012 -2013. This sales trend shows the revenue to the country.

COMPARISION OF PRODUCTION AND SALES

Year	2008-09	2009-10	2010-11	2011-12	2012-13	2013-14
Production	11172275	14057064	17892409	20382026	20647611	21481526
Sales	97242431	2295397	15481381	173617691	7793701	18421538

TABLE:04

FIG: 04

INTERPRETATION

When we compare the production and sales, we can see that sales almost reached the production this trend will be very useful to the economy to get very good revenue. In 2011-12, sale is highly increased but can’t reached the production. In other years Indian automobile sale followed the same trend of production.

DOMESTIC MARKET SHARE

Domestic Market Share for 2013-14 ( In %)
Passenger Vehicles	14
Commercial Vehicles	3
Three Wheelers	3
Two Wheelers	80

TABLE:05

FIG:05

INTERPRETATION

In the year 2013 -14, there is a highest market share in two wheeler (80 %) and the least in three wheeler and commercial vehicle (3 %)

EXPORTS

India’s automobile exports have grown consistently and reached $4.5 billion in 2009, with United Kingdom being India’s largest export market followed by Italy, Germany, Netherlands and South Africa. India’s automobile exports are expected to cross $12 billion by 2014
According to New York Times, India’s strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki. In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011.

In September 2009, Ford Motors announced its plans to set up a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export. The company said that the plant was a part of its plan to make India the hub for its global production business. Fiat Motors also announced that it would source more than US$1 billion worth auto components from India.

In July 2010, The Economic Times reported that PSA Peugeot Citroën was planning to re-enter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles, investing EUR 700M in the operation. PSA’s intention to utilize this production facility for export purposes however remains unclear as of December 2010. In 2009 India (0.23m) surpassed China (0.16m) as Asia’s fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26rn) by allowing foreign carmakers 100% ownership of factories in India, which China does not allow.

In recent years , India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells the in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch electric vehicles in Europe . The firm is also planning to launch an electric version of its low-cost car Nano in European the U.S. Mahindra & Mahindra is prej,aring to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India, which will market the product worldwide.

Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project. While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry.

Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.

EXPORT TREND

Category	2008-09	2009-10	2010-11	2011-12	2012-13	2013-14
Passenger vehicle	335729	446145	444326	508783	559414	593507
Commercial vehicle	42652	45004	74043	92258	80027	77056
Three wheeler	148066	173214	269968	361753	303088	353392
Two wheeler	1004174	1140058	1531619	1975111	1956378	2083938
TOTAL	1530621	1804426	2319956	2937905	2898907	3107897

TABLE.06

FIG:06

INTERPRETATION

From the above data we can see that the export of automobile from in India is increasing year to year. In this data two wheeler is the most exported output and relatively least exported by the commercial vehicles. We can see the increasing in the export of the automobile in every year , this will be profitable to the economy and will help in India’s economic growth.

ENHANCEMENT OF SHARE IN GLOBAL TRADE:

The global auto component industry is estimated to be US $ 1.2 trillion in value and is likely to increase to US $1.7 trillion by 2015 as per ACMA. Sourcing from low cost countries is likely to increase from US $ 65 billion in 2002 to US $ 375 billion by 2015. Although India’s exports are still small (US $ 1.8 Billion in 2005-06 Prov.), it could leverage this off shoring trend and the quality of its supply base to build dominant top two position in auto component exports from low cost countries by 2015. A position in the top two would enable
India to achieve export of US $ 20-25 billion by 2015. This would increase India’s share of world auto component trade from 0.9 percent in 2005-06 (Prov.) to 2-2.5 percent by 2015, inclusive of domestic consumption. Such a high growth in the Auto component Sector is expected to lead to an additional 750,000 direct jobs in its sector along-with indirect employment of 1.8 million people over the next 10 years. In addition to creating incremental employment of about 2.5 million people ih direct and indirect jobs, it is also expected to result in incremental revenue to the exchequer by US $ 3.8 billion. Investments in this sector would also grow by US $ 15 billion from the Current level of US $ 3.1 billion.

The development in automobile sector aims not only at the financial benefits of the country but also at the employment opportunity to the people in India . This development provides a huge opportunity of 750,000 direct jobs and 1.8 million indirect employment to the people over the next 10 years this will be a great boost to the Indian economy.

FISCAL SIGNIFICANCE OF ROAD USER TAXES

THE COMPOSITION OF STATE LEVEL TAXES

States own tax revenue collections form roughly 40 percent of the total tax revenues of the country. The most important tax for the States has been sales tax, contributing over 54 per cent of their own tax revenue (Figure 7). Naturally, all attention of the State Governments to improve the tax revenue growth is focused on sales tax. However, there is wide variation among States in the extent to which they depend on sales tax. In States like Kerala and Goa the dependence on sales tax is over 70 percent of own tax revenues, while in States like Sikkim, Mizorarn it is only around 30 percent. It should however be noted that the compositional pattern of state taxes has very little relation with either the size of the State in terms of population, area or percapita income.

SOURCE	Sales tax	State excise	Motor vehicle tax	Stamps and reign	Agricultural taxes	Other taxes
REVENUE (In %)	54.7 %	18%	6.4 %	6.2%	2.6%	12.1%

TABLE:07

FIG:07

INTERPRETATION

As regards the other taxes, State excise duties yield roughly 18 per cent of own taxes, but the share differs widely among the States owing to the variation in the prohibition policy. Stamp and registration fees form about 6.2 percent and motor vehicle tax another 6.4 percent. The shares of these two taxes have been stable over time. Agricultural based taxes such as land revenue and agricultural holdings tax form a negligible 2.6 percent.

The Seventh Schedule of the Constitution of India demarcates the taxing powers of Union and State Governments and entries 46 through 63 in the State List specify the items on which States can levy taxes Accordingly, the major taxes levied by the States are sales tax, State excise duties, stamp duties and registration fees, motor vehicles tax, land revenue, agricultural income tax, entertainment tax, profession tax, electricity duty, and other minor taxes. In this the motor vehicle (automobile) tax have 6.4% contribution this not a small contribution when compared to some other tax revenues.

CHAPTER-4

FINDINGS, SUGGESTION AND CONCLUSION

FINDINGS AND SUGGESTIONS

FINDINGS

Ø Gross turnover of the automobile industry in India is in an increasing trend. In 2013-14 turnover reached at 67607 (USD million).But it was reduced by 33250 (USD Million) in the year 2009-10.

Ø Almost all produced units were sold out every year. It gives large revenue to the economy.

Ø The automobile industry in India is one of largest in the world and one of the fastest growing globally.

Ø The revenue from automobile exports, domestic production, sales contributes to GDP of the country as well.

Ø The India’s automobile exports are growing year to year.

Ø The development in this sector aims not only at the financial growth of the country but also at providing employment opportunity in India.

Ø In India, the production of automobile industries is fast growing year to year. Now, the production capacity of automobile is high.

Ø The vision of automobile industry in the world for design and manufactures of automobile and auto component with output reaching a level of US$ 145 Billion by 2016.

SUGGESTIONS

Ø Industry must try to introduce more fuel efficient vehicles to the Indian market

Ø Must try to reduce pollution due smoke emission from vehicle.

Ø The market availability of new models of vehicles is relatively low, so try to make the market availability for buy and sell.

Ø The repair and maintenance cost are high, so to make quality product.

CONCLUSION

From the data presented we can see the growth in automobile industry in India. This growth provides so many benefits to the country. Production, sales, exports etc. in this industry is growing year by year and it is not a small contribution to a developing country like India. In now, the Indian market is mostly watching the growth of automobile industry.

I hereby conclude that the topic the overall performance of automobile industry in India. Now, the overall performance of automobile industries like ; production, sales, exports etc..are very important factor of Indian economic growth.

BIBLOGRAPHY

Ø WWW.SIAM.COM

Ø SIA ( SECRETARY FOR INDUSTRIAL ASSISTANCE )

MY PROJECTS

Thursday, September 17, 2015

A STUDY ON THE PERFORMANCE ANALYSIS OF AUTOMOBILE INDUSTRY IN INDIA DISSERTATION