TWO WHEELER INDUSTRY
It has been more than 50 years now that bikes have been rating Indian automobile section. In 1955 the Indian govt needed the study and reliable motorcycle for its Army and Police to Patrol the ragged border high ways. The first batch of 350cc bullet, the super bikes in India of all times from the Royal Enfield co, of the UK where received and assembled at Chennai. Since then bike in India have been flourishing as a two wheeler segment and Indian bikes gaining in popularity all across the world Talking of Bikes and CC. Bikes having four strokes –engines are thought to be more fuel efficient motor bikes they are the main reason for the growth of motor bike segment in India. The two-wheeler industry in India has been in existence since 1955. It consists of three segments o
The increase in sales volume of this industry is proof of its high growth. In 1971, sales were around 0.1 million units per annum. But by 1998, this figure had risen to 3 million units per annum. Similarly, capacities of production have also increased from about 0.2 million units of annual capacity in the seventies to more than 4 million units in the late nineties.The two-wheeler industry in India began operations within the framework of the national industrial policy as espoused by the Industrial Policy Resolution of 1956. This resolution divided the entire industrial sector into three groups, of which one contained industries whose development was the exclusive responsibility of the State, another included those industries in which both the State and the private sector could participate and the last set of industries that could be developed exclusively under private initiative within the guidelines and objectives laid out by the Five Year Plans.
Private investment was channelized and regulated through the extensive use of licensing giving the State comprehensive control over the direction and pattern of investment. Entry of firms, capacity expansion, choice of product and capacity mix and technology, were all effectively controlled by the State in a bid to prevent the concentration of economic power.due to lapses in the system, fresh policies were brought in at the end of the sixties. These consisted of MRTP of 1969 and FERA of 1973, which were aimed at regulating monopoly and foreign investment respectively. Firms that came under the purview of these acts were allowed to invest only in a select set of industries. This net of controls on the economy in the seventies caused several firms to Operate below the minimum scale of efficiency Under-utilize capacity and Use outdated technology.
While operating below the minimum scale of efficiency resulted from the fact that several incentives were given to smaller firms, the capacity under-utilization was the result of the capacity mix being determined independent of the market demand. The policy of distributing imports based on capacity, causing firms to expand beyond levels determined by demand so as to be eligible for more imports. Use of outdated technology resulted from the restrictions placed on import of technology through the provisions of FERA. Recognition of the deleterious effects of these policies led to the initiation of reforms. In 1975 which took on a more pronounced shape and acquired wider scope under the New Economic Policy (NEP) in 1985. As part of these reforms, several groups of industries were relicensed and ‘broad banding’ was permitted in select industries. Controls over capacity expansion were relaxed through the specification of the operate below the minimum scale of efficiency of production for several industries. Foreign investment was allowed in select industries and norms under the MRTP Act were relaxed. These reforms led to a rise in the trend rate of growth of real GDP from 3.7% in the seventies to 5.4% in the eighties. However the major set of reforms came in 1991 in response to a series of...
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