Automobile Industry 1981 – 1990
The technological backwardness of the Indian two-wheeler industry was one of the reasons for the initiation of reforms in 1981. Foreign collaborations were allowed for all two-wheelers up to an engine capacity of 100 cc.
This prompted a spate of new entries into the industry the majority of which entered the motorcycle segment, bringing with them new technology that resulted in more efficient production processes and products.
The variety in products available also improved after ‘broadbanding’ was allowed in the industry in 1985 as a part of NEP.
This, coupled with the announcement of the minimum scale of efficiency of production for the two wheeler industry, gave firms the flexibility to choose an optimal product and capacity mix which could better incorporate market demand into their production strategy and thereby improve their capacity utilization and efficiency.
These reforms had two major effects on the industry:
• First, licensed capacities went up to1.1 million units per annum overshooting the 0.675 million units per annum target set in the Sixth Plan.
• Second, several existing but weaker players died out giving way to new entrants and superior products.
The technological backwardness of the Indian two-wheeler industry was one of the reasons for the initiation of reforms in 1981. Foreign collaborations were allowed for all two-wheelers up to an engine capacity of 100 cc.
This prompted a spate of new entries into the industry the majority of which entered the motorcycle segment, bringing with them new technology that resulted in more efficient production processes and products.
The variety in products available also improved after ‘broadbanding’ was allowed in the industry in 1985 as a part of NEP.
This, coupled with the announcement of the minimum scale of efficiency of production for the two wheeler industry, gave firms the flexibility to choose an optimal product and capacity mix which could better incorporate market demand into their production strategy and thereby improve their capacity utilization and efficiency.
These reforms had two major effects on the industry:
• First, licensed capacities went up to1.1 million units per annum overshooting the 0.675 million units per annum target set in the Sixth Plan.
• Second, several existing but weaker players died out giving way to new entrants and superior products.