Abstract:

The Indian automobile industry has come a long way since its inception. This paper has made an attempt to identify the role of lead firms in mapping the activities related to upgrading. Upgrading refers to the process through which firms may move up the value chain. The literature identifies different types of upgrading such as product, process, functional and inter-chain upgrading which form the essential dynamics of the growth of a manufacturing industry. The Indian automobile industry is one of the successful cases in this regard. Using a case analysis approach, this paper looks at upgrading efforts made by seven major OEMs, including the use of advanced modular platforms, new materials and platform sharing among firms. The role of policy in facilitating the emergence and growth of lead firms has also been assessed. Through the use of advanced modular platforms, platform sharing among different car manufacturers, automation and use of newer materials the authors note that upgrading has been occurring in every category. While this paper has examined upgrading for the lead firms, their suppliers or vendors are often small and medium enterprises which are not upgrading. The major challenges faced by the Indian component manufacturers are high cost of capital, non-availability of skilled labour and rising price of operational cost.