In the pre-1970 years cars were considered a luxury, manufacturing was licenced, expansion restricted and location of plants as well as size of vehicles determined by the government to discourage competition. Quantitative restrictions on imports and high duties and taxes were the order of the day and Tata, HM, Bajaj and PAL were market leaders.

The evolution started in the following decades and though the policies remained largely the same between 1970-80, new entrants emerged in the two wheeler segment. However, the first major jump came in the mid-1980s with the entry of the Japanese with Maruti Udyog (collaboration with Suzuki), Hero Honda, Swaraj Mazda and Escorts Yamaha.

The trend of new entrants and increasing production was accentuated in the 1990s as duties came down in accordance with the demands of the market. While Maruti extended its stranglehold in the car market, the world started looking at India as a major emerging market and global bigwigs like Ford, DCM Toyota, Diamler Chrysler, Hyundai, GM, Skoda and Honda threw their hats in the ring.

This decade also saw a paradigm shift in trade as the industry quickly changed from a producer’s to a buyer’s market and auto finance took roots in the industry. The boom also fuelled environment concerns and first steps on pollution were taken. Those like Standard and PAL who could not respond to the changing needs of the market perished and others quickly took their place.

The next big leap in the industry took place in the early years of this century and 2001 marked the beginning of landmark policy reforms in the sector. Quantitative restrictions were removed, 100 per cent FDI was permitted through the automatic route while conditions like foreign exchange neutralisation and export obligations were removed. As a result the industry got a further push and output doubled.

... contd.