• GoI allowed automatic approval for foreign equity investment up to

Political 100% in the automotive sector

• Provision of tax incentives and support for R&D for local
manufacturing

Economic • Surging domestic demand with high GDP per capita growth

• Growing middle class, urbanization, young population and increasing

Social aspiration level of youngsters accelerating the growth of passenger
Pestle car market

Analysis • Many manufacturers setting up their R&D centers in India

Technological • GOI launched the National Automotive Testing and R&D Infrastructure
Project (NATRiP) with the aim of creating a state-of-the-art R&D
infrastructure in the country

Legal • Increasing legal provisions related to safety norms and emission

standards

Environmental • Norms for upgradation of passengers vehicles to cleaner fuels (Bharat

Stage III & IV)
 Porter’s 5 Forces
Threat of new entrants
• In majority of markets, the expertise and capital required to setup
parts or auto manufacturing facilities would be a huge entry barrier.
• However ,in India given its high forecasts on growth, infrastructure
progress as well as ever increasing financing options the threat of new
entrants is on the higher side

Rivalry
• The level of rivalry is very high Bargaining power of
in India in all the passenger Suppliers
Bargaining power of Consumers
vehicle segments Bargaining power of suppliers
High due to the number of alternatives
• The number of competitors is low as there are a large
available and low switching cost
and their offerings have grown number of suppliers in the
significantly over the last Indian automotive industry
decade

Threat of Substitutes
• There exists significant threat of
substitutes from two wheelers and
other modes of transport
• Switching cost and price of
substitutes is low while availability is
high