ndia is the second-biggest market for small cars after Japan but has a very low car penetration ratio. Only seven in every 1,000 Indians own a car as compared to 12 in neighbouring Sri Lanka and Pakistan. The figure is 10 to 15 times higher for advanced countries such as Britain and the US. According to industry estimates, India's car fleet was only 7.3 million at the end of 2004.

Although the foundation for a strong passenger car industry was laid in the early 1990s, the real momentum began only in 2000, when the government significantly shifted its policies, moving towards an open market. It also took steps to make manufacturing more internationally competitive by creating export promotion zones and expanding infrastructure.... more