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AUTOMOBILE INDUSTRY The automobile industry in Indiathe tenth largest in the world with an annual production of approximately 2 million

unitsis expected to become one of the major global automotive industries in the coming years. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. The monthly sales of passenger cars in India exceed 100,000 units. History In 1953, the government of India and the Indian private sector initiated manufacturing processes to help develop the automobile industry, which had emerged by the 1940s in a nascent form. Between 1970 to the economic liberalization of 1991, the automobile industry continued to grow at a slow pace due to the many government restrictions. A number of Indian manufactures appeared between 1970-1980.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. Challenges faced by Indian Automotive Industry in the new age The Indian automotive industry has been facing new challenges due to the rapid changes taking place during the last decade. This article discusses those challenges and initiatives taken by the government to overcome them. The Indian auto industry is changing rapidly. During the last decade, many international auto manufacturers, either by themselves or in partnership with Indian companies, have started manufacturing activities in India. The ancillary industries have also grown in tandem. The quality of production in small- and medium-scale industries has improved to such an extent that they started exporting products to international manufacturers. The major breakthrough of recent years is the unveiling of "Nano" by Tata Motors during the auto expo 2007. This has received worldwide attention and proved that India can not only design an automobile of international standards but also execute the project at a much lower cost through innovative choice of components, materials, engine design etc. These developments in the auto sector have given new confidence to everyone related to the auto industry and specifically to the government which resulted in the announcement of the Auto Policy 2006-2016 by the Ministry of Heavy Industries. According to the Auto Policy, the Indian auto sector is expected to grow to US$ 216 billion by 2016 and add 2.5 million new jobs to the economy. Every year two to three million people are expected to purchase new vehicles. Several million vehicles and

components are expected to be exported to both developed and developing nations. To achieve these goals, it is important that the present GDP growth rate, which is more than 8 per cent, continues to remain at the same level for the next 8-10 years. The government is also giving some concessions to the auto industry. To realize the above growth predictions, it is important to overcome various challenges the industry is facing currently. Two of the foremost challenges are the spiraling cost of fuel and the paucity of highly skilled manpower.