India has a huge automobile industry. The country ranks 4^thin Asia and 9^th in the world as the world's largest automobile Industry. India has an annual production of approximately about 2.3 million units.

Presently, India is the world's largest manufacturer of tractors, second-largest manufacturer of two-wheelers, and fifth-largest manufacturer of commercial vehicles.

The automobile industry in India gained momentum after the liberalization in 1991. The industry has continued to grow consistently and is increasingly becoming competent in the global market. In the recent past, India has seen an upsurge in the automobile industry thanks to its relaxed restriction on the investment policies in the sector. India's overall economic growth has also played a significant role in attracting foreign investors in India to invest in the automobile sector of the country.

The automobile sector in India has displayed great advances in relation to the utilization of new technologies and being flexible in the wake of the changing business scenario.

Both the central government of India and its state governments have taken several measures to draw investments in the sector and further accelerate the growth of the industry in the country. The government has liberalized the norms for foreign investment in the sector. Presently the government permits 100% direct foreign investment in the sector.

The government has also undertaken several policy measures and incentives to boost investment in the automobile sector of India. The most prominent policy is Auto Policy, which was drawn in 2000. This policy basically aims to establish a globally competitive automobile industry in India and contribute to the Indian economy.

The important objectives of the Auto Policy are:

1.    Making India a global source for auto components

2.    Aiding the development of vehicles that can be driven by alternative energy sources

3.    Developing domestic safety methods that are on par with international standards