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Tamil Nadu - Industry Profile

Automobiles Industry in Tamil Nadu

The Indian Automotive Industry after de-licensing in July 1991, has grown at a spectacular rate of 17% on an average for last few years. The industry has now attained a turn over of Rs. 1,65,000 Crores (34 billion USD) and an investment of Rs. 50,000 Crores. Over of Rs. 35,000 Crores of investment is in pipeline. The industry is providing direct and indirect employment to 1.31 Crores people. It is also making a contribution of 17% to the kitty of indirect taxes. The export in automotive sector has grown on an average CAGR of 30% per year for the last five years and has reached a turnover of 8 billion USD. The export earnings from this sector are 3.5 billion US $ out of which the share of auto component sector 1.8 billion US$. It is estimated that the total turnover of the automotive industry in India would be of the order of US$ 75.3 billion in 2012 (a substantial increase from the size of US$ 34 billion in 2005-06).

There is a potential for much higher growth in the domestic market due to the fact that the current car penetration level in India is just 7 cars per thousand. The increase in purchasing power at the top echelon of about 300 million people in the country, where the per capita income is over US $ 1000, implies that passenger car growth in the domestic market is on the verge of a major and sustained boom. It is expected that the passenger car market which was 1 million in 2003-2004 can easily cross the 3 million mark by 2015. This can lead to an increase in the size of the domestic auto-component market from the current level of US $ 9.8 billion (2005-06) to at least US $ 15 billion by 2015.

Even with this rapid growth, the Indian Automotive Industry's contribution in global terms is very low. This is evident from the fact that the passenger car segment has crossed the production figure of 1 million in the year 2005-06. India's share is about 1.6% of world production as the total number of passenger car being manufactured in the world is 60 million against the installed capacity of 90 million. Similarly, export constitutes approximately 0.3% of global trade.

Status of Automobile Industry in Tamil Nadu:

  • Automobile industry occupies a pride of place in the industrial map of Tamil Nadu. Traditionally, Tamil Nadu is known for Manufacturing. Started in 1840, Simpsons pioneered India's automobile industry rail coaches, Motor Cars, Diesel engines and Steam passenger buses. In 1948, Ashok Leyland was started for assembly of Austin cars. The Integral Coach Factory (ICF) was established in October 1955. In 1960s, TVS Group Guidance Bureau Page 2 established a number of auto components manufacturing plants. However, this momentum was lost in subsequent years.
  • To rejuvenate the growth momentum in automobile industry, present Government brought out a very innovative Policy "Ultra Mega Policy for Integrated Automobile Projects" that offers a very attractive package of support to automobile projects investing more than Rs.4000 Crores. As a result of this Policy, since May 2006, investments attracted by Tamil Nadu in automobiles & components manufacturing is Rs.21900 Crores, almost 5 times of the Investments attracted during previous 15 years (May 1991- April 2006). The total employment potential in these new projects is:1.20 lakhs (Direct+Indirect).
  • As a result of our efforts, Chennai is now emerging as one Top 10 Global Automobile manufacturing centers. By 2010-11, Chennai will have an installed capacity to produce 12,80,000 cars and about 3,50,000 commercial vehicles each year. This translates to 3 cars output every minute and one Commercial vehicle every 75 seconds. During 2008-09, Chennai produced 5.33 lakhs passenger cars accounting for 32% of India's production.
  • From bicycles to battle tanks "B to B", everything that moves is manufactured at Chennai. More than 350 auto components suppliers are located in Tamil Nadu accounting for above 35% of India's production capacity.
  • Chennai has emerged as India's largest automobile and auto components exporter in India. Hyundai has made Chennai the manufacturing and export hub for its small cars. The 'i10 and i20' are being manufactured only in Chennai and exported to the world. Chennai is Hyundai's largest base outside Korea.
  • Caterpillar USA, Komatsu Japan and Doosan South Korea chose Chennai to establish large earth moving equipment manufacturing plants.

This site was updated on 18th September 2018
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Tamil Nadu Industrial Guidance & Export Promotion Bureau
( Industries Department - Govt. of Tamil Nadu )
19-A, Rukmani Lakshmipathy Salai, Egmore, Chennai - 600 008. INDIA

Phone: +91-44-2855 3866 | Fax: +91-44-2855 3856 | guidance@tn.gov.in

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