Abstract
Several large multinationals and a few local assemblers dominate the Indian automobile industry. The largest multinational, Maruti Suzuki, entered the Indian automobile industry with a policy of developing local automotive parts manufacturers to achieve high local content ratio. This study seeks to determine the extent to which foreign direct investment (FDI) in host countries contributes to the growth of automobile parts manufacturers. We use district‐level panel data from 2000 to 2008 to assess the linkage between the production of major automobile assemblers and the development of automotive parts suppliers located in the same and adjacent districts to those assemblers. Our regression results show the heterogeneity of the linkages, suggesting that the formation of industrial clusters by local parts suppliers and the expansion of their production capacity are likely to be key determinants of the success of FDI in the Indian automobile industry, rather than relying on in‐house parts production or imports.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
