IMPACT OF GLOBALIZATION ON THE AUTOMOBILE INDUSTRY IN INDIA

Abstract

Over long periods of time a variation is noticed in the factors determining Indian automobile industry growth. However, some of these factors are persistent over time. The paper attempts to identify these persistent factors determining the growth of the Indian automobile industry and then examine the impact of globalisation, as an economic shock, on the Indian automobile industry in light of these determining factors. The paper finds that profitability is a major driver of automobile industry growth in India, along with labour productivity and capital intensity. It also uses a structural break analysis to show that globalization had a considerable positive contribution in increasing the pace of growth in the Indian automobile industry for a period of 20 years. Globalization facilitated better returns from the industry’s profits and opened up more avenues to explore growth for two decades and helped the industry gather the required momentum.