Question

How did liberalism policy of government help in progress of automobile industry?

Answer 1

During the early stages, the automobile industry was not accorded much importance by the Indian Government. However, the attitude changed during the 1990's. A number of reforms were initiated in 1991. Liberal policies affected during this period, proved to be beneficial to the automobile industry. The fiscal measures, tax reliefs and reforms in equity regulations and foreign exchange led to significant growth in the automobile sector. A reduction in the percentage of tariffs imposed on exports and a change in the banking policies was instrumental in the expansion and growth of the banking sector.

Prior to the mid 1990's, the Indian automobile sector comprised of indigenous companies. The automobile market in India was however, opened up to foreign investors in 1996. International names like Ford, Hyundai, Toyota, Volvo, Daimler Chrysler and GM Honda were thus, able to make their foray into the Indian automobile sector. Furthermore, the auto emission rules issued by the government in recent years ensured that the vehicles manufactured in India, catered to international standards. At present, the automobiles sector contributes 4 % to the GDP. About 9.7 million automobiles were manufactured in 2005-2006. Export figures had crossed the magic figure of one billion during 2003-2004.