November 28, 2022

How Chennai became Detroit of India and South Asia

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We are well aware of the fact that Detroit is the heart and soul of the American Automotive Industry, and following its footsteps, now Chennai is taking the lead to become Detroit of India. Fortunately, this south Indian city is also consistently growing to be the ‘Detroit of South Asia.” With an extensive base of automobiles, it is earning a handsome amount and attracting many foreign investors. Worlds’ major automobile companies are changing their perceptions towards this city. This is the reason why Chennai is forecasted to be the turning point in development of the nation.

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Auto Industry in India

In 1898, the first automobile arrived in India. Between 1910 and 1920, the automobile industry in India took root with the establishment of assembly lines in Bombay, Calcutta, and Madras. The import and export of automobiles experienced strong growth over the 30,000 mark after 1930.

General Motors, Ford, and the other assemblers had to shut down their plants in 1954, due to a decision by the US General Motors Foundation to establish a local automobile industry. This had the unfortunate consequence of forestalling the development of modern automotive technology.

However, the venture with the Suzuki Corporation of Japan by the Government owned Maruti, rolled out positively for Automobile manufacturing and created a path for creation of Detroit of India. People began to like the range of choices available. It was a watershed in India’s auto industry, registering a sales figure of more than 2,00,000 by 1999 from a mere 1,200 units in 1984. MUL also has since diversified its portfolio by inclusion of vans, multi-utility vehicles (MUVs) and mid-sized cars. Such improvisation has helped in changing peoples’ perception towards ownership of cars. 

The delicensing of the auto industry in 1993 led to the entry of several foreign automobile manufacturers in India. Daimler, Hyundai, Ford, GM, Peugeot, Mitsubishi, Honda, and Fiat are among these, and many of them arose after the delicensing of the auto industry.

WTO rules prompted the recovery of the Germany market’s character from the termination of protectionist conditions like its 70 percent local content requirement, minimum capital investment of $50 million, and import financial registration fee. Such policies prevented India from being more open and competitive.

Development of India’s Automotive Industry in Chennai

Tamil Nadu has created highly supporting infrastructure for the settlement of various factories and industries. As a result, it has attracted many large automotive corporations to set up their secondary base in Chennai. It has also attracted several foreign capital investments and a huge contribution in the rise of Indian Detroit, a.k.a. Chennai. 

The former president of India, Mr. R. Venkatraman, dreamt of making Tamil Nadu the “Detroit of South India,” and within his power, worked very hard to turn this dream into reality. The State has come a long way far beyond his vision, and now very much looking to beat the world competition. 

The city is now contributing to more than 40% of the country’s auto parts and vehicles. World’s major automotive giants such as TVS, Ashok Leyland, Royal Enfield, TI Cycle, TAFE, Hyundai, Mitsubishi, Volkswagen, Nissan have a major manufacturing unit in Chennai. Partnering with such major brands has led the city to become the Detroit of Asia.

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The automobile industry around Chennai caters to the automobile market throughout India. TVS group, and Rane group, Asokh Leyland are significant local players who should be credited to be pathfinders in Indian Automobile Industry; their world class Auto ancillaries have really shown the way for International players.

Success of Chennai as Detroit of India and South Asia

Chennai is currently the most popular destination when it comes to the lineup of leading automobile brands. This is also due to Chennai’s skilled labor population and they are considered the best workers worldwide. Their prominent and intellectual skills clearly explains why they’re preferred over others. When the city is full of such skilled and smart people, there is no reason why the Detroit city of India couldn’t beat international competition. Perhaps, soon it will be facing competition with Detroit itself!

According to studies, India surpassed China in becoming Asia’s fourth-largest exporter of automobiles— a proud moment for Indians. 

The automobile market in India is growing at a fast pace. Since 2010, automakers have manufactured 42 million passenger vehicles and 1.5 million cars. Considering the current growth of this industry, India is expected to surpass the world automotive industry by 2050 with a projected volume growth of about 611 million vehicle units. 

As a matter of interest, Detroit of Asia and India (Chennai), is estimated to contribute majorly in India’s automotive industry. Apparently, the city will account for about 60 percent of the country’s automotive exports.

Blog’s Takeaway

In conclusion, Chennai became the Detroit of India and South Asia due to governmental support, its booming economy, and its many technological advancements. These advancements have led this city in becoming one of the most technology-active cities in the world. In the coming years, this city and even entire Tamil Nadu is estimated to surpass the world’s automobile industry.

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