The general slowdown worldwide has of course impacted the Indian economy too, which remains almost stagnant for quite some time. However, there is still growing impression among Western circles that India has still the potential to emerge one of the fastest growing economies.
According to the global banking major, HSBC, though the economic growth in emerging markets slowed down in the October-December quarter, India, among the BRIC nations, expanded at a faster rate than China. Among these four large economies, Brazil posted a return to growth following the previous quarter’s stagnation, while Russia overtook India to post the best rate of output growth, “China saw its growth improve, but remained relatively weak, while India posted a solid rate of expansion”.
A look at the HSBC Purchasing Managers’ Index (PMI) for both manufacturing and services indicates that the worst for the Indian economy seems to be over. The reforms push taken by the Government since last September is likely to boost investor sentiment, opine experts.
HSBC also believes that India’s growth rate can improve from 5.2 per cent in the current fiscal to 6.2 per cent in 2013-14 and further to 7.5 per cent in 2014-15.
Though passing through a slowdown, the Indian economy now offers a rare opportunity to invest for the future. No doubt, with a change in technology every day, the Indian automobile industry is also currently witnessing major investments both for new product development and production expansion.
Keeping this as an advantage, many Indian vehicle and component manufacturers are literally on an investment expansion spree. The German car maker Mercedes-Benz India, for instance, is investing Rs. 850 crores as part of the expansion plan for its Pune plant. The new entrant Renault Nissan JV is also contemplating major investment for introducing new model vehicles as well as for the KPO unit being set up in Chennai.
Coming to Mahindra & Mahindra, the leading SUV manufacturer in the country has plans for a massive investment of Rs. 5,000 crores jointly with the Korean major Ssangyong. Isuzu of Japan has plans to set up its greenfield manufacturing plant in Sri City in Andhra Pradesh at a massive investment of Rs. 1,000 crores. Luxury Swedish bus major Volvo continues investing on new developments as well as for brand creation in India. Another Swedish newcomer Scania has already made a long-term commitment to the Indian market with a huge investment of Rs. 2.5 billion for its Bangalore facility. As for MAN, the company is currently exporting major portion of its production to different markets and it has plans to invest a sizeable amount for its various new developments.
On the other hand, other commercial vehicle majors like Ashok Leyland, Tata Motors, VECV and Daimler have already announced their plan to bring out an array of new models and variants with huge investments.
In order to meet the changing trend in vehicle technology, component manufacturers too are making fresh investments. For instance, Bosch Automotive Electronics India Pvt. Ltd. of Germany will be investing Rs. 5.5 billion at its Bangalore unit.
Of the overall fresh investments in the country, Tamil Nadu, popularly known as the Detroit of the East, attracted Rs. 28,000 crores from various sectors, including automobiles, in 2012.
All this is clear indication that the current downtrend is the best bet for the future.