India emerging as car hub for global auto manufactures

Mumbai: Global auto manufacturing majors are showing interest in Indian automobile market as car exports from India marked a fivefold increase in the past five years. With some of the world's biggest car makers continuously making high profit from Indian market, the market is becoming a favorite zone for other big companies also.

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Moreover, analysts conceive that car exports over the next three years will surge nearly 300 percent to more than half-a-million vehicles a year.

Giving further inspiration, Indian auto major Tata Motors' $2,500 (about 1 lakh) worth Tata minicar has attracted the global attention. Moreover small cars built in local plants by Japanese and South Korean car makers such as Suzuki, Hyundai and Nissan are also witnessing high exports.

Earlier, India's biggest car exporter, Hyundai added a midnight shift at its southern India plant to boost production 40 percent and to meet booming demand for its i10 minicar abroad. Both Hyundai and Suzuki are seeing Europe as the market for their made-in �India exports for their recently revealed subcompacts.

Shohei Kimura, Managing Director of Nissan Motors India said, "Right now, India has everything�the local market, the quality and the companies." India's economic growth has been powered by service sector and local consumption, not by manufacturing sector. Indian needs more manufacturing to absorb new workers and to grow further.

However, in world-wide performance, India by exporting only 2 lakh cars in 2007, is still behind many other countries like Japan and South Korea, that shipping five million and three million cars respectively every year.

Though issues like Tata faced at Singur, Bengal, regarding its new nano car plant, lack of support from central government or local bureaucrats, a decrepit transportation infrastructure and iffy power supplies often made it tough to keep factories running companies like Hyundai is expanding its production. The company has started producing cheap subcompacts at new plant with a capacity of about 100,000 units a year near Chennai.

After increasing car production in India to about 500,000 this year, Hyundai is now planning to raise that to almost 650,000 next year. The company is also studying the U.S. market as a possible target for its India-made cars.

Other manufactures also plan to increase the export. For Instance Suzuki exported about 50,000 cars last year and hopes to increase foreign sales to 2 lakh units in the next two years. When Nissan raises its output to more than 2 lakh vehicles a year, about half will be exported.