From Import Substitution to Integration into Global Production Networks: The Case of the Indian Automobile Industry

Asian Development Review 36:2, 2019

28 Pages Posted: 19 Sep 2019

See all articles by Prema-chandra Athukorala

Prema-chandra Athukorala

Crawford School of Public Policy, Australian National University; Australian National University (ANU)

Veeramani C

affiliation not provided to SSRN

Date Written: September 10, 2019

Abstract

This paper examines the growth trajectory and the current state of the Indian automobile industry, paying attention to factors that underpinned its transition from import substitution to integration into global production networks. Market-conforming policies implemented by the government of India over the past 2 decades, which marked a clear departure from protectionist policies in the past, have been instrumental in transforming the Indian automobile industry in line with ongoing structural changes in the world automobile industry. India has emerged as a significant producer of compact cars within global automobile production networks. Compact cars exported from India have become competitive in the international market because of the economies of scale of producing for a large domestic market and product adaptation to suit domestic market conditions. Interestingly, there are no significant differences in prices of compact cars sold in domestic and foreign markets. This suggests that the hypothesis of “import protection as export promotion” does not hold for Indian automobile exports.

Keywords: automobile industry, foreign direct investment, global production networks, India

JEL Classification: F13, F14, L92, L98

Suggested Citation

Athukorala, Prema-chandra and Athukorala, Prema-chandra and C, Veeramani, From Import Substitution to Integration into Global Production Networks: The Case of the Indian Automobile Industry (September 10, 2019). Asian Development Review 36:2, 2019, Available at SSRN: https://ssrn.com/abstract=3451544

Prema-chandra Athukorala (Contact Author)

Crawford School of Public Policy, Australian National University ( email )

Coombs Building (Blgd 9)
Australian National University
Canberra, Australian Capital Territory 0200
Australia
+61 26125 8529 (Phone)
+61 26125 3700 (Fax)

HOME PAGE: http://rspas.anu.edu.au/economics/staff/athu/athu.htm

Australian National University (ANU)

Veeramani C

affiliation not provided to SSRN

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