Drivers Of Foreign Direct Investment in the Indian Automobile Industry

Emerging global markets like China and India have been experiencing rapid growth by reaping the fruits of high foreign direct investment (FDI) by Trans National Corporations (TNC’s) in their domestic economy.This book analyses and explores various factors that attract FDI into the Indian automobile industry. To illustrate theses key driving forces, the study discusses a)Indian political regulatory environment as it directly affects the inflow of investment, b)Availability of real capabilities for extracting rents by investors, c)Changing demography:rise of the middle class and d)Cost factors:availability of cheap labor and well established industries for auto components which makes the Indian automobile industry a popular destination for new foreign investments.The study finds that even though these factors have been crucial in changing the global attractiveness of Indian auto industry, they alone may not be able to sustain investments over the long run. Changes in institutional factors like level of corruption, political stability and infrastructural enhancement are necessary so that India continues to remain a prime destination for new foreign investments.