Automobile industry is one of the largest industries in India. Its turnover in the year 2004-05 was 100 billion rupees. West Bengal has traditionally been very strong in the engineering industries and has been an important manufacturing base in the past. West Bengal’s Hindustan Motors was one of the pioneers by commencing production of vehicles in the state in the year 1948. Recently it has collaborated with Mitsubishi Company of Japan to diverse into a wide range of cars and manufactures everything related to automobile industry like trekkers, trucks, and also luxury cars like Mitsubishi Lancer and touching a consolidated net sale of US$ 233.47 million in the last fiscal year.

Other automobile giants of the country, like Tata Motors, have expressed their interest to set up manufacturing units in the state, and have already sent an investment proposal of Rs. 10 billion to set up a manufacturing unit at Singur (Hooghly District) spread over 1000 acres. In addition, Telcon a subsidiary of the Tatas is setting up an equipment manufacturing unit in Kharagpur. Others like Ashok Leyland and Ural (Russia) have expressed their desire for setting up manufacturing units in the State.

The size of the Indian component industry was US$ 7 billion in 2003-04 out of which US$ 1 billion was exported. A McKinsey study estimated that India would produce US$ 40 billion worth of auto component by 2014-15, up by almost US$ 30 billion from 2004-05. Both, Indian and West Bengal will have a competitive edge in this sector because auto parts here costs around 25-30% less than North America and Europe and 15% less than South Korea and Mexico while the quality is being at par.

West Bengal realizing this huge potential in this sector has geared up with appropriate plans and policies to boost this sector. Also it has got certain inherent competitive advantages since the state is located in the heart of India’s steel and manufacturing cluster. Hindustan Motors (HML) has announced plans to invest Rs. 850 million to manufacture automotive forgings, stampings, and castings. The company has got the nod from the West Bengal government to modernize and develop its facility at Uttarpara. Auto component SEZ has also obtained recent approval and is scheduled to come up in the industrial belt of Kharagpur with private participation. Jetro, a division of the ministry of economy, trade and industry of the Japanese government too has expressed their interest to set up auto component manufacturing units in the state.

A number of policy initiatives have been taken by the government to facilitate the automotive industry. These include :