Development of Indian Automobile Sector: Impact of Japanese Fdi

India is an emerging economy which has witnessed unprecedented levels of economic expansion, alongside China, Russia, Mexico and Brazil. India is a cost effective and labor intensive economy, and has benefited immensely from outsourcing of work from developed countries, and has a strong manufacturing and export oriented industrial framework. Since initiating its economic reform in 1991, India has continued its transition from a closed and planned economic policy toward a path of liberalization. As a result India has achieved stable economic growth averaging 6% annually , gradually enlarging its presence in the world economy. Now, India is one of the major recipients of FDI. According to UNCTAD (2008), India has emerged as the second most attractive destination for FDI after China and ahead of the US, Russia and Brazil. The policy of reforms followed by Government of India in the post-1991 period has increased inflow of foreign capital in the industrial & economic development of the country. Foreign capital inflow is encouraged not only as source of financial capital but also as a tool of knowledge and technology transfer. Since initiating reform in 1991 India has continued its transition from a closed and planned economic policy toward a path of liberalization. Cumulative amount of FDI in India from April 2000 to April 2011 has reached US$ 197,935 million.
INDIAN AUTOMOTIVE SECTOR Automotive Industry, globally, as well in India, is one of the key sectors of the economy. Due to its deep forward and backward linkages with several key segments of the economy, automotive industry has a strong multiplier effect and acts as one of the drivers of economic growth. Indian automotive industry produces a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motor-cycles, three wheelers, tractors and other agricultural equipment etc. It is estimated that the total