Realising India’s potential in the automotive industry, international carmakers are now focusing on India and giving more preference to India than China to establish their manufacturing plants and units.

Factors such as “ready market facility” and “low cost manufacturing base” are strong reasons that prompted international carmakers to choose India. Sriperumbudur, near the Chennai port, is the small car export base for South Korea’s Hyundai Motors.

Similarly, Suzuki, a major partner of the largest carmaker in India Maruti Udyog, is making nearly a one billion pound investment in India with an eye on 200,000 vehicle exports by 2010. Entering the market now are newcomers like France’s Renault. Nissan plans to make cars in India to export them to Europe.

Global players, in recent years, are making their entry into the Indian Market by either joint ventures, collaboration, or wholly owned subsidiaries. Relaxation of trade rules by the Indian government to promote expansion of the auto industry has encouraged global players to expand their automotive industry in India.

Carmakers are expecting the annual output to exceed three million cars by 2010. Foreign automakers can now set up their own fully owned subsidiaries giving India a potential edge over China, which has a local partner mandate. Global car manufacturers are scrambling to set up their auto plant for small car variations in India indicating that India, in the near future, is on its way to become a small car export hub.