A Threadbare Analysis on the State of Affairs of Indian Automobile Sector in the Aftermath of Present Recessional Trend and Its Remedy

Abstract

The contribution of the Indian Automobile industry in the economic growth of the country is significantly high. Besides catering to a large domestic market, the automobile industry in India has also captured market shares in many foreign countries successfully in the last few decades. Not only is it an important export-oriented industry of the nation but also the fourth largest exporter of automobiles in Asia. However, in the recent years (2018–2019), it has faced an unprecedented slump. This chapter captures this fact by calculating the growth of car selling for the four quarters of the period 2018–2019 across the Indian states. It primarily tries to find out whether the variation in income and tax levied on petrol and diesel has an impact on the variation in the car selling across the states for the abovementioned time period. It has been proven from our study that higher income of a state has a positive impact, whereas higher tax on petrol and diesel which varies across the states has a negative impact on car selling. Apart from this, this study then distinctively tries to find out whether there exists any neighborhood impact on growth rate of car selling and different tax rate on petrol and diesel on the basis of Moran's Index. It is witnessed that there exists a high level of spatial autocorrelation among the different states in case of growth of a car selling and tax imposition on diesel as well as on petrol. This fact necessitates some degree of regional orientation in formulating an effective policy to revive the automobile industry on the part of the Government.

Citation

Bhattacharyya, A., Ghosh, D. and Majumder, A. (2021), "A Threadbare Analysis on the State of Affairs of Indian Automobile Sector in the Aftermath of Present Recessional Trend and Its Remedy", Pal, M.K. (Ed.) Productivity Growth in the Manufacturing Sector, Emerald Publishing Limited, Leeds, pp. 253-267. https://doi.org/10.1108/978-1-80071-094-820211019