India is emerging as a global automobile giant. In recent years this industry has made pioneering efforts in adopting modern technology and allowing the entry of foreign players.  This is well supported by the economic conditions particularly in the financial sector and in foreign direct investment.  During the last decade, conscious efforts have been made to fine-tune state policy to enable the Indian automobile industry realize its potential to the fullest.    The freeing of the industry from this restrictive environment has helped it to itself to global development.  Increasing competition as result of liberalization has led to continuous modernization as well as international standards.  Moreover, auto finance with aggressive marketing strategies has played a bid role in boosting the automobile demand.  Commercial vehicles, widely considered to be the economy’s barometer, have had a good start for the year.

In the Automobile Sector, the tariffs on row material nport for products are between 5-25%.  Tariff on component imports range from 25% to 30%.  The import tariff on products in these categories is same regardless of whether the item is imported in SKD/CKD condition or whether in CBU form or even in second hand form.

The first six months of the current financial year saw that sales and production of vehicles (cars and utility vehicles) have gone up.  Domestic sales of passenger vehicles rose by 32 percent during first six months of this fiscal compared to the corresponding previous period..  Sales of motorcycles, the largest selling sub-segment of two-wheelers, grew by 6.7 per cent during the same period.  And, cumulative sales of the commercial vehicles segment as a whole also went up by about 18 percent.

The growth in the sale of commercial vehicles is closely depending on two factors like Agricultural freight movement and Industrial freight movement.  The commercial vehicles segment has grown by 27 per cent in 2002-03.  Over the years, despite the fact that the growth has been healthy, large inventories piled up during the boom period of 1997-98, has affected the growth of CV segment adversely.  This situation is changing and the demand pick up will certainly help to make the industry.  The commercial vehicles sales were the highest in the last six years and the medium and heavy commercial vehicles market share was up at 60 per cent.  Also the Company Ashok Leyland managed a 24 per cent growth in volumes in the domestic market during 2002-03.

The Cv segment displayed a strong of 20% in 2003.  A total of 3.01 lac vehicles were sold during the year, compared to 1.58 lac in the year 2002.  The growth was contributed by both, the MHCV and the LCV segment which saw sales rising by around 28%.  MHCV’s contributed to nearly 60% of the total sales, while the share of LCV’s was 40%.  The overall growth in CV’s was largely due to a sharp rise in the domestic sales which jumped 30.4% at 1.91 Lac units, while exports declined 9.8% 10704 units.