History Of Cars In India

History of cars in India

                                      The car industry in India is one of the largest industry in the world. An annual production of 23.96 million vehicles in FY (fiscal year) 2015–16, following a growth of 2.57 percent over the last year. The automobile industry accounts for 7.1 percent of the country's gross domestic product (GDP). The Two Wheelers segment, with 81 percent market share, is the leader of the Indian Automobile market, owing to a growing middle class and a young population. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has a 13 percent market share.

India is also a prominent auto exporter and has strong export growth expectations for the near future. In FY 2014–15, automobile exports grew by 15 percent over the last year. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in the world by 2020.

In 1897, the first car ran on an Indian road. Through the 1930s, cars were imports only, and in small numbers.
An embryonic automotive industry emerged in India in the 1940s. Hindustan Motors was launched in 1942, long-time competitor Premier in 1944, building Chrysler, Dodge, and Fiat products respectively. Mahindra & Mahindra was established by two brothers in 1945 and began assembly of Jeep CJ-3A utility vehicles. Following 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. In 1953, an import substitution programme was launched, and the import of fully built-up cars began to be restricted.


The 1952 Tariff Commission

In 1952, the government appointed the first Tariff Commission, one of whose purposes was to come out with a feasibility plan for the indigenization of the Indian automobile industry. In 1953, the commission submitted their report, which recommended categorizing existing Indian car companies according to their manufacturing infrastructure, with the licensed capacity to manufacture a certain number of vehicles, with capacity increases allowable, as per demands, in the future. The Tariff Commission recommendations were implemented with new policies that would eventually exclude companies that only imported parts for assembly, as well as those with no Indian partner. In 1954, following the Tariff Commission implementation, General Motors, Ford, and Rootes Group, which had assembly-only plants in Mumbai, decided to move out of India.

The Tariff commission policies, including similar restrictions that applied to other industries, came to be known as the "license raj", which proved to be the greatest undoing of the Indian automotive industry, where bureaucratic red tape ended up causing demand to outstrip supply, with month-long waiting periods for cars, scooters, and motorcycles.

Passenger Cars

  • Hindustan Motors, Calcutta - a technical collaboration with Morris Motors to manufacture Morris Oxford models that would later become HM Ambassador.
  • Premier Automobiles, Bombay - the technical collaboration with Chrysler to manufacture Dodge, Plymouth, and Desoto models and with Fiatto manufacture the 1100D models which would later with Premier Padmini range.
  • Standard Motor Products of India, Madras - a technical collaboration from Standard-Triumph to manufacture Standard Vanguard, Standard 8, 10 and later Standard Herald.

Utility and Light Commercial Vehicles
  • Vehicle Factory Jabalpur - started manufacturing Jonga Light Utility Vehicles and Vahan 1 Ton (Nissan 4W73 Carriers) in India, under license from Nissan of Japan. They were the main troop carriers of the Indian Armed Forces and much powerful than any other vehicle of their class.
  • Mahindra & Mahindra, Bombay - a technical collaboration with Willys to manufacture CJ Series Jeep.
  • Bajaj Tempo, Poona now Force Motors - a technical collaboration with Tempo (company) to manufacture Tempo Hanseat, a three-wheeler, and Tempo Viking and Hanomag, later known as Tempo Matador in India.
  • Standard Motor Products of India - a technical collaboration from Standard has a license to manufacture the Standard Atlas passenger van with panel van and one-tonne one-tonne pickup variants.

Medium and Heavy Commercial Vehicles
  • Vehicle Factory Jabalpur - started manufacturing Shaktiman trucks with technical assistance from MAN SE of Germany. The trucks were the main logistics vehicle of the Indian Army with several specialist variants. VFJ still is the sole supplier of B vehicles to the Indian Armed Forces.
  • Heavy Vehicles Factory - was established in 1965 in Avadi, near Chennai to produce tanks in India. Since its inception, HVF has produced all the tanks of India, including Vijayanta, Arjun, Ajeya, Bhishma and their variants for the Indian Army. HVF is the only tank manufacturing facility of India.
  • Tata Motors, Poona, then known as TELCO - a technical collaboration with Mercedes Benz to manufacture medium to heavy commercial vehicles both Bus and Trucks.
  • Ashok Motors, later Ashok Leyland, Madras - a technical collaboration with Leyland Motors to manufacture medium to heavy commercial vehicles both Bus and Trucks. Ashok Motors also discontinued its Austin venture formed in 1948 to sell Austin A40 and retooled the factory to make trucks and buses.
  • Hindustan Motors - a technical collaboration with General Motors to manufacture the Bedford range of medium lorry and bus chassis.
  • Premier Automobiles - a technical collaboration with Chrysler to manufacture the Dodge, Fargo range of medium lorry, panel vans, mini-bus, and bus chassis.
  • Simpsons & Co, Madras - part of Amalgamations Group (TAFE Tractors)- a technical collaboration with Ford to manufacture medium lorry and bus chassis, but did not utilize that option until the 1980s

1970 to 1983

However, growth was relatively slow in the 1950s and 1960s, due to nationalization and the license raj, hampered the growth of the Indian private sector.
The beginning of the 1970s saw some growth potential and most of the collaboration license agreements came to an end but with the option to continue manufacturing with renewed branding. Cars were still meant for the elite and Jeeps were largely used by government organizations and some rural belts. In commercial vehicle segments, some developments were made by the end of the decade to cater improved goods movements. The two-wheeler segment remained unchanged except for to increased sales in urban among the middle class. But more fillip was target towards farm tractors as India was embarking on a new Green Revolution. More Russian and eastern bloc imports were done to increase the demand.
But after 1970, with restrictions on the import of vehicles set, the automotive industry started to grow; but the growth was mainly driven by tractors, commercial vehicles, and scooters. Cars still remained a major luxury item. In the 1970s, price controls were finally lifted, inserting a competitive element into the automobile market. However, by the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited numbers. During the eighties, a few competitors began to arrive on the scene.
The OPEC oil crisis saw an increasing need for installing or redesign some vehicle to fit diesel engines on the medium commercial vehicle. Until the early 1970s, Mahindra Jeeps were on Petrol and Premier commercial vehicles had Petrol model options. The Defence sector too had most trucks on Petrol engines.

1984 to 1992

In 1984, the then Prime Minister of India, Indira Gandhi established the Ordnance Factory Medak, near Hyderabad. It started manufacturing Infantry Combat Vehicles christened as Sarath, the backbone of India's mechanized infantry. OFMK is still the only manufacturing facility of ICVs in India. To manufacture the high-power engines used in ICVs and main battle tanks, Engine Factory Avadi, near Chennai, was set in 1987. In 1986, to promote the auto industry, the government established the Delhi Auto Expo. The 1986 Expo was a showcase for how the Indian automotive industry was absorbing new technologies, promoting indigenous research and development, and adapting these technologies for the rugged conditions of India. The nine-day show was attended by the Prime Minister Rajiv Gandhi. From the end of the 1970s to the beginning of the 1980s saw no new models but the country continued with 2-decade old designs forcing the government to encourage and let more manufacturers into the fray.

Post-1992 liberalization

Eventually, multinational automakers, such as Suzuki and Toyota of Japan and Hyundai of South Korea, were allowed to invest in the Indian market, furthering the establishment of an automotive industry in India. Maruti Suzuki was the first, and the most successful of these new entries, and in part the result of government policies to promote the automotive industry beginning in the 1980s. As India began to liberalize its automobile market in 1991, a number of foreign firms also initiated joint ventures with existing Indian companies. The variety of options available to the consumer began to multiply in the nineties, whereas before there had usually only been one option in each price class. By 2000, there were 12 large automotive companies in the Indian market, most of them offshoots of global companies.

Slow export growth

Exports were slow to grow. Sales of small numbers of vehicles to tertiary markets and neighboring countries began early, and in 1987 Maruti Suzuki shipped 480 cars to Europe (Hungary). After some growth in the mid-nineties, exports once again began to drop as the outmoded platforms provided to Indian manufacturers by multinationals were not competitive. This was not to last, and today India manufactures low-priced cars for markets across the globe. As of 18 March 2013, global brands such as Proton Holdings, PSA Group, Kia, Mazda, Chrysler, Dodge, and Geely Holding Group were shelving plans for India due to the competitiveness of the market, as well as the global economic crisis.

Emission Norms

In 2000, in line with international standards to reduce vehicular pollution, the central government unveiled standards titled "India 2000", with later, upgraded guidelines to be known as Bharat Stage emission standards. These standards are quite similar to the stringent European emission standards and have been implemented in a phased manner. Bharat Stage IV (BS-IV), the most stringent so far, was implemented first, in April 2010, in 13 cities—Delhi (NCR), Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra—and then, as of April 2017, the rest of the nation.

Local manufacture encouraged

India levies an import tax of 125% on foreign imported cars, while the import tax on components such as gearboxes, airbags, drive axles, is 10%. Therefore, the taxes encourage cars to be assembled in India rather than be imported as completely built units.
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