HISTORY OF ORIGIN
The history can be divided into four phases:
1898 to 1957
The first motorcar on the streets of India was seen in 1898. In 1903, an American company began a public taxi service with a fleet of 50 cars in Mumbai. For about 50 years after the first car arrived in India, cars were directly imported until foreign manufacturers began to realize the vast potential India had with its vast distances and large population. Before world war-1, around 4,000 motor vehicles were imported. During the wars, a start for an automobile industry was made by establishing assembly plants in Mumbai, Calcutta, and Chennai. The import / assembly of motor vehicles grew manifold post 1920s, crossing 30,000 units by 1930. It was towards the end of the war that the importance of establishing an indigenous automobile industry in India was realized when Premier Automobiles Ltd. (PAL) and Hindustan Motors (HM) set up factories in the mid 40s for progressive manufacture rather than assembly from imported components. At the time of independence, The PAL and HM focused on passenger cars, whereas the Mahindra brothers started Mahindra & Mahindra in 1945 with the objective of making utility vehicles. After Independence, Automobiles was defined as the industry of huge importance in India hence steps were taken for its control and regulation by the government. The starters, were restricted from importing completely built-up units, if not completely banned. In 1952 the government appointed the first Tariff Commission. As per suggestion by the Tariff commission, the government terminated the activities of assemblers that did not have any manufacturing program. It was also decided to keep the number of models selected for production to a realistic minimum so as to offer economies of scale for each type.
The Indian Rupee was not convertible on current account and hence many assemblers such as General Motors decided to shutdown and leave India in 1954. Thus in 1954 the Indian Automobile industry changed. By 1956, the Indian auto industry had no new players as limited volumes were available. There were three categories of passenger cars, three medium trucks and one heavy truck. Each product existed within its own private segment and there was never any fear of competition.
From 1954 to 1964 the local manufacturers focussed more on imported parts and indigenization. Until 1968, foreign collaborations with equity participation were permitted....