IMPACT OF FOREIGN DIRECT INVESTMENT ON INDIAS AUTOMOBILE SECTOR-WITH REFERENCE TO PASSENGER CAR SEGMENT

K. Rajalakshmi. Research Scholar, Department of Management Studies, SRM University, Kattankulathur, 603 203, India, Dr. T. Ramachandran, Professor & Head, Finance, SRM University, Kattankulathur, India. Abstract FDI Inflows to Automobile Industry have been at an increasing rate as India has witnessed a major economic liberalization over the years in terms of various industries. The automobile sector in India is growing by 18 percent per year. The basic advantages provided by India in the automobile sector include, advanced technology, cost-effectiveness, and efficient manpower. Besides, India has a well-developed and competent Auto Ancillary Industry along with automobile testing and R&D centers. The automobile sector in India ranks third in manufacturing three wheelers and second in manufacturing of two wheelers. The major investing countries are Mauritius (mainly routed from developed countries), USA, Japan, UK, Germany, the Netherlands and South Korea. 24. India needs to worry on the foreign direct investment (FDI) front. According to the statistics released by Indias Ministry of Commerce and Industry, the country has received only $18.35 billion in FDI in the first 11 months (April-February) of the financial year 2010-2011, compared to $63 billion that came in the 11 months of the previous financial year. Future prospect of Indian Automotive Sector is looking bright. Indigenous automobile companies are replacing foreign multinational companies in terms of consumer satisfaction. Since 2002, automotive sector has much to deliver in the years to come. Direct Investment Inflows in India-Opportunities and Benefits, Important Aspects of FDI in Automobile Industry, Recent FDI Trends in India, The major foreign players who have a significant role in the development of Indian automobile industry, were discussed and the passenger car segment growth, Production, sales and Investment were analyzed.. Here the researcher using three statistical tool for analyzing the study, ARIMA, Linear & Compound Model for analysis purpose to measure future prediction using time series analysis. Hence this study necessitated the causes and impact of FDI flows in automobiles sector and also policy regulation, FDI flows in passenger car segment and recent FDI trend in this sector were discussed. Key words: FDI inflows, automobile sector, passenger car and policy regulation.

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INTRODUCTION International capital flows have significant potential benefits for economies around the world. Countries with sound macroeconomic policies and well functioning institutions are in the best position to reap the benefits of capital flows and minimize the risks. Much of these capital flows is due to trade in equity and debt markets. FDI inflows mainly on the basis of issue/transfer of equity/preference shares of Indian companies to foreign direct investors. In recent years, India has emerged as a desirable location for FDI by investors from the United States and many other countries. Its rapidly growing economy, low wages and educated work force have attracted FDI in the services and manufacturing sectors to serve both the Indian market and third country markets. Foreign investors enthusiasm for India, however, has been tempered by widespread poverty, rigidity in the labour market, rising salaries and high employee turnover in some industries, an antiquated infrastructure, weakens in the overall educational system and excessive bureaucracy and corruption. (1- Petr Pav Anek University of Nebraska, Omaha, Restructuring of Polish Passenger Car Industry through FDI, Journal Eurasian Geography and Economics, p 353. sep 2007.) FDI is the process whereby residents of one country (the home country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country). Foreign direct investment (FDI) is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization. According to International Monetary Fund (IMF) definition, FDI has three components, viz., equity capital, reinvested earnings and other direct capital. A large number of countries, including several developing countries report FDI inflows in accordance with the IMF definition, which include reinvested earnings and other direct capital flows, besides equity capital. India has become the Centre of attraction for global car makers given the immense opportunity with mid-income masses aspiring to own a car as well as abundance of raw materials and low-cost labour. Favourable Foreign Direct Investment (FDI) policy makes the entry of international players easy into India. Various manufacturers are envisaging India as the hub for small car production which CARE Research believes will drive the car exports from our country. (Research & Markets: The 'Indian Passenger Vehicle Industry' India Report 2010). Introduction & Background of the study Foreign Direct Investment capital flows into India have increased dramatically since 1991, when Indias opened it economy in FDI, and inflows have accelerated since 2000. FDI inflows into India reached $ 11.1 billion in calendar year 2006 almost double in the year 2005 and are expected to continue increasing after 2010.(Global FDI has experienced a corresponding resurgence since 2004, after declining for several years in the early 200s. FDI inflows into India declined between 2001 and 2003, before experiencing a resurgence that surpassed average global growth, with a year on-year increased.( UNTAD, world report 2006, data based on official Indian government.) During the nineties, foreign direct investment (FDI) accounted for an increasing share of private capital flows to developing countries. According to the World Investment Report 2002 (WIR02) published by United Nations Conference on Trade and Development (UNCTAD), developing countries received 28 per cent of the world FDI inflows in 2001. Global FDI inflows have, however, declined by Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 23

51 per cent in 2001, which also affected the flow to developing countries. Developing countries witnessed a 14 per cent decline in FDI inflows in 2001 to US $ 205 billion from US $ 238 billion in 2000. A few developing countries like China and India, however, registered increased FDI inflows in 2001, which is indicative of their attractiveness for international investment. Direct Investment Inflows in India-Opportunities and Benefits: The government of India has taken measures to ensure proactive and positive policies to boost the Foreign Direct Investment to telecommunications sector in India. Tremendous growth has taken place in this sector in recent years. A number of telecom service providers are working in both the private and public sector. The two most crucial causes behind the huge success of the telecom sector are the growing demand for mobile phone service and private sector participation in the telecommunication industry. The automobile sector in India industry is one of high performing sector of the Indian economy. This has contributed largely in making India a prime destination for many international players in the automobile industry who wish to set up their business in India. The automobile industry in India is growing by 18 percent per year. The production level of the automobile sector has increased from 2 million in 1991 to 9.7 million in 2006 after the participation of global players in the sector, now grown up to $ 5.3 billion in the March 2011. ( CMIE & Government of India, Ministry of Commerce & Industry, Fact sheet on FDI) TABLE:I-SHARE OF TOP INVESTING COUNTRIES FDI EQUITY INFLOWS ( Financial years ): (Amount in crores) Ranks Country 2009-10 2010-11 Cumulative Inflows age to total % (April-March) (Apr00-Nov.10) Inflows (in (April-Nov.) Terms of US $) 1. MAURITIUS 50,899 49,633 23,576 234,482 42 % 2. SINGAPORE 15,727 11,295 6,198 51,344 9% 3. U.S.A 8,002 9,230 4,247 41,436 7% 4. U.K 3,840 3,094 1,765 27,764 5% 5. NETHERLANDS 3,922 4,283 3,643 23,769 4% 6. JAPAN 1,889 5,670 4,141 21,036 4% 7. CYPRUS 5,983 7,728 2,746 20,523 4% 8. GERMANY 2,750 2,980 473 12,941 2% 9. FRANCE 2,098 1,437 1,569 8,488 2% 10. U.A.E 1,133 3,017 1,289 8,312 1% TOTAL FDI INFLOWS* 123,025 123,120 64,083 556,819 --Note: (i) includes inflows under NRI Schemes of RBI. (ii) Cumulative country-wise FDI equity inflows (from April 2000 to November 2010) . (iii) %age worked out in US$ terms & FDI inflows received through FIPPB/SIA+RBIS Automatic Route+ acquisition of existing shares only. Mauritius is the most preferred route for directing FDI into India while Singapore is the second largest contributor. India needs to worry on the foreign direct investment (FDI) front. According to the statistics released by Indias Ministry of Commerce and Industry, the country has received only $18.35 billion in FDI in the first 11 months (April-February) of the financial year 2010-2011, Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 24 2008-09 (April- March)

compared to $24.63 billion that came in the 11 months of the previous financial year. Although it is a significant dip, the government has not mentioned the reasons for the fall except for saying that the trend will be reversed as it has received a few proposals for FDI". (Anand Sharma, Minister for Commerce & Industry- April 2011.) The FDI inflow in the full financial year (April-March) of 2009-2010 was $25 billion. Going by the current data, it is unlikely that India has recorded large numbers in March 2011, to beat last years FDI inflow. Purpose and Scope of the study The FDI in Automobile Industry has experienced huge growth in the past few years. The increase in the demand for cars and other vehicles is powered by the increase in the levels of disposable income in India. The automobile industry in India is growing by 18 percent per year. The automobile sector in India was opened up to foreign investments in the year 1991. 100% Foreign Direct Investment (FDI) is allowed in the automobile industry in India. The production level of, the automobile sector has increased from 2 million in 1991 to 9.7 million in 2006 after the participation of global players in the sector. India is the second largest country is the world with a population of over one billion people. As a developing country, Indias economy is characterized by wage rates that are significantly lower than those in most developed countries. These two traits combine to make India a natural destination for foreign direct investment (FDI). Until recently, however , India has attracted only a small share of global FDI, primarily due to government restrictions on foreign involvement in the economy. But beginning in 1991 and accelerating rapidly since 2000, India has liberalized its investment regulations and actively encouraged new foreign investment, a sharp reversal from decades of discouraging economic integration with the global economy. We presents two methods of analysis, that hold special interest on FDI inflows in Automobile industries and other study shows a special effects on passenger car segment growth rate. Other chapter explains automobile industries growth, production, sales, export and Import rates, Passenger car growth rates and other inflows and outflows. METHODOLOGY In our study we focused on FDI flows, which has become a very important source of capital to developing countries. This section of the study presents the empirical results of the impact of FDI flows in Indias economic growth in automobiles sector after post liberalization era, especially with passenger car segment. The result will be based on regression analysis (ARIMA, Co-efficient, linear & Compound Model). The period of study is from 1991 to 2011 collection of FDI flows to India. To collect data for the study is on FDI flows, selection of industry is based on more FDI flows on Automobile Industry before and after recession. Important Aspects of FDI in Automobile Industry FDI up to 100 percent, has been permitted under automatic route to this sector, which has led to a turn over of USD 12 billion in the Indian auto industry and USD 3 billion in the auto parts industry, The manufacturing of automobiles and components are permitted 100 percent FDI under automatic route. The automobile industry in India does not belong to the licensed agreement . Import of components is allowed without any restrictions and also encouraged. Hence , the study is focused on the data particularly in automobiles sector-sub sector of Heavy and Light vehicles- passenger car segment.

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OBJECTIVES 1. The main objective of this study is to analyze the FDI inflows in India in Automobile Industries with special reference to passenger car segment. 2. To examine the trends and composition of FDI flows 3. To Examine the source of FDI on Economic Growth 4. To identify the problem faced by India in FDI growth in Automobile sector and suggest the policy implication thereof. 5. To compare and analyze the FDI inflows in passenger car segment with growth rate. 6. To rank the Companies based upon highest FDI inflows. The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. Foreign Direct Investment in the automobile industry of India has helped in the growth of this sector in terms of production, domestic sales and export. FDI is also permitted in the manufacture of auto components in India. ( Economy Watch 25th July 2011.) Industry composition Passenger cars and utility vehicles are the main segments of the Indian passenger vehicle industry with the former accounting for ~80% the total volumes. Within the passenger car segment, the mini and compact segment together accounts for around 80% of total volumes. Over the last 5- years the compact car segment in particular has been the focus for most OEMs, leading to a large number of product introductions and the segment has outperformed the rest of the industry in terms of growth. Being the largest segment by volume, the compact car segment is also intensely competitive with the presence of seven players with as many 16 offerings. The segment has also witnessed the highest number of launches over the past 12- months with major ones being Ritz, A Zen Estilo (from MSIL), i10, i20 (from HMIL) and Indica Vista (from Tata Motors Limited - TML). This segment has also been the bread and butter for Indias small car exports, especially from MSIL and HMIL. Overall, the top three market players in the passenger car segment MSIL, HMIL and TML - currently dominate the segment. Over a period of time however, this segment (mini + compact) is likely witness some fragmentation as it attracts new players and more aggressive model launches from hitherto smaller/ marginal players. In H1, 2010, this segment is likely to witness the entry of General Motors, Volkswagen, Ford India and Nissan. Going forward, all serious players in the Indian market are expected to introduce products in the compact segment, leading to some fragmentation of the overall segment. (Anjan Ghosh, Subrata Ray, Shamsher ,Dewan, ICRA) Passenger Car Market in India: Car manufacturing has entered into another dramatic phase in India in recent times. The global auto majors like Ford, Toyota, Suzuki and Hyundai have set up manufacturing plants in India and are using India as an important production base to source their market Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 26

requirements both for India as well as the global market. The growth of auto parts manufacturers in India has also been phenomenal on the sidelines of automobile manufacture ring. ar manufacturing has come a long way in India since its beginning in late 1940s. From a modest beginning that comprised of a couple of car manufacturers based totally on foreign technology, today the country boasts of quite a handful of players, mostly native companies that are in the business of car manufacturing. The two auto manufacturers Hindustan Motors and Premier Automobiles that started off in the 1940s have enhanced their production, technological and manufacturing proves that enables them to offer better and efficient cars to the consumers of this age. Mahindra & Mahindra, Tata Motors and a host of foreign car makers like Ford, Toyota, Suzuki, Honda, Hyundai and Skoda are gradually enhancing their scale of operations and presence in the country sensing the growing business opportunity for the car makers in India. Analysis On Auto-ARIMA ( Auto Regressive Integrated Moving Average Model) Autoregressive Integrated Moving Average or ARIMA (p,d,q) models are the extension of the AR model that uses three components for modeling the serial correlation in the time series data. In interpreting the results of an ARIMA model, most of the specifications are identical to the multivariate regression analysis. ARIMA is a much more computationally intensive and advanced econometric approach. This section of the study presents the empirical results of the impact on capital inflows on India in General and at Automobile Industry. TABLE-2. COEFFICIENT OF FOREIGN CAPITAL-TOTAL - INFLOW AND OUT FLOW ( 1991 TO 2015) USING ARIMA MODEL - (Rs. In Crore) Actual Actual Actual value of Predicted value of Predicted value value of Predicted value Net value Year inflow Outflow inflow 1,992 60,505 -1,55,271.098 48,615 -1,31,877.140 11,890 -25,079.45 1,993 70,275 61,098.900 54,785 92,921.258 15,490 -18,598.745 1,994 91,827 52,640.909 63,335 76,282.790 28,492 -21,807.390 1,995 81,360 1,17,198.997 58,252 1,07,692.489 23,108 6,917.333 1,996 81,642 1,08,455.913 73,081 96,642.351 8,561 8,800.479 1,997 1,28,559 1,51,579.714 89,404 1,37,271.414 39,154 36,561.471 1,998 1,46,102 2,12,147.760 1,11,783 1,49,946.780 34,319 48,156.863 1,999 1,43,561 2,32,706.113 1,09,331 1,87,448.704 34,230 50,828.681 2,000 1,75,822 2,56,129.239 1,31,616 1,76,229.188 44,206 76,925.007 2,001 2,47,491 3,13,318.062 2,06,996 2,27,788.249 40,495 82,695.852 2,002 2,06,404 3,90,947.185 1,65,324 3,15,099.464 41,080 99,350.339 2,003 2,24,237 3,41,872.055 1,71,871 2,20,576.820 52,366 1,13,981.989 2,004 3,47,974 4,26,644.392 2,70,747 2,99,832.950 77,227 1,28,402.298 2,005 4,41,675 5,41,203.155 3,16,308 4,03,013.234 1,25,367 1,38,270.848 2,006 6,39,946 6,07,819.413 5,27,981 4,18,849.742 1,11,965 1,45,861.846 2,007 10,51,767 8,08,841.775 8,48,094 7,14,396.971 2,03,673 1,43,019.357 2,008 17,36,225 11,48,912.822 13,02,452 9,93,305.586 4,33,773 1,79,498.170 2,009 13,73,684 16,85,479.290 13,41,303 14,66,344.357 32,381 1,38,829.906 2,010 -10,41,602.181 -12,54,130.644 #NULL! 80,140.962 2,011 -11,16,898.632 -12,74,370.212 #NULL! 3,41,461.281 2,012 -11,87,667.054 -13,04,521.246 #NULL! 1,45,486.138 2,013 -12,56,465.449 -13,42,413.837 #NULL! 1,98,599.450 Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 27

2,014 2,015

---

13,24,406.735 13,91,975.117

---

13,86,353.132 #NULL! 14,35,015.334 #NULL!

2,75,908.057 2,17,946.953

FINAL PARAMETER: Sum of squares / Residual variance= 651590.8/4383852 TABLE 2 (A)-Covariance Matrix: (B) Co-efficient Standard Error of T-Ratio Approx: B T - Value P Value AR 1 0.435 0.844 0.515 0.614 MA 1 -0.582 1.400 -0.416 0.683 YEAR 67281.191 22304.679 3.016 0.009 CONSTANT -134179403.642 44620701.505 -03.007 0.009 Graph-1-TSPLOT-FDI INFLOW:
2000000

1000000

0 Inflow Fit for INFLOW from -1000000 1992 1996 2000 2004 2008 2012 2014 1994 1998 2002 2006 2010 ARIMA, MOD_8 CON

Year

Note: Red line indicates the inflows from 1991 to 2011. Green lines indicates the prediction up to 2014. TABLE 2 (B)-Arima Results for Outflows: SEB Standard Error of B AR 1 0.781 0.24 MA 1 -0.591 0.46 YEAR 65512.096 23020.91 CONSTANT -130631903.06 46053643.07 Note: 0 to 0.01 = ** denotes significant at 1 % level 0.011 to 0.05 = * denotes significant at 5 % level > 0.05 = denotes No significant. (B) Coefficient T-Ratio T - Value 3.25 -1.27 2.84 -2.83 Approx: P Value 0.005 0.223 0.012 0.013

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The three main confidents levels used to test for significance are 90%, 95% and 99% . if a coefficients t-statistic exceeds the Critical level, it is considered statistically significant. Alternatively, the P-Value calculates each t-statistic tics probability of occurrence, which means that the smaller the P-Value, the more significant the Coefficient. The trend of capital flows has been shown in Graph 1. Shows are positive except the year 2008-09. The FDI is stable and positive after the liberalization. So FDI is only capital inflows into India is stable in nature. the flow of Foreign Direct Investment to India in the month of March increased at a faster pace. The FDI Inflows to the country in the month of March 2006 was at US $1,244 Millions. Graph-2-TSPLOT-FDI-OUTFLOW:
2000000

1000000

0 Outflow Fit for OUTFLOW from -1000000 1992 1996 2000 2004 2008 2012 2014 1994 1998 2002 2006 2010 ARIMA , MOD_10 CON

Year

TABLE-2(C)-ARIMA Model result for Net Inflows: (B) Coefficient AR 1 AR 2 MA 1 YEAR CONSTANT -0.736 -0.468 -0.785 11637.30 -23206600.82 MA1 Standard Error of B 2.7 1.0 2.9 3336.2 6674110.3 T-Ratio T Value -0.282 -0.462 -0.272 3.488 -3.477 Approx: P - Value 0.782 0.651 0.789 0.004 0.004

Covariance Matrix: AR1 AR2 AR1 AR2 MA1

7.3330643 -.1429977 7.6479627 -.1429977 1.0257873 .2408472 7.6479627 .2408472 8.2897277 Page 29

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Graph-3- NET INFLOW:

500000

400000

300000

200000

100000 Net inflow Fit for NETINF from -100000 1992 1996 2000 2004 2008 2012 2014 1994 1998 2002 2006 2010 ARIMA, MOD_15 CON

Year
The R-Squared, or coefficient of Determination indicates the percent variation in the dependent variable that can be explained and accounted for by the independent variables in this regression analysis. The multiple Correlation coefficient (Multiple R) measures the correlation between the actual dependent variable (Y) and the estimated or fitted (Y) based on the regression equation. Foreign Direct Investment capital flows into India have increased dramatically since 1991, and inflows have accelerated since 2000. FDI inflows to India reached $11.1 billion in calendar year 2006 almost double the 2005 figure and expected to continue increasing at 2011-12. Consistent with the global pattern, FDI inflows into India declined between 2001 and 2003, before experiencing a resurgence that surpassed average global growth, with year on year increases of 45 to 72 percent, respectively, in fiscal year 2004-05 and 2005-06. During the last 15 years, India has attracted more than US$ 40 billion of foreign investment (Table-2). At a time, when the flow of private capital to developing countries has shrunk considerably, private flows to India have strengthened, and are currently running at 3,02,456 $US million at 2009 and outflow of 2,93,310 $US million increased and net inflow $US 32, 381 at 2008-09 increased to $US 37,763 million at 2009-10.

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TABLE-3. AUTO COMPONENTS INDUSTRY INVESTMENTS Investments, Import & Export Market size - In US $ billion Year Investment Growth Import G.R Export US $ billion Rate % Market % Market size size 2002-03 -2003-04 3.1 17 1.4 1.2 2004-05 3.8 21 1.9 33 1.7 2005-06 4.4 17 2.5 31 2.5 2006-07 5.4 23 3.6 45 2.7 2007-08 7.2 33 5.2 45 3.5 2008-09 7.3 1 6.3 30 3.8 2009-10 9.0 23 8.2 20 3.8 2010-11 10.3 14 10.0 23 5 Source: ACMA- Growing Capabilities of Indian Auto components.p-20. ( $ 2.5 bn Investment is expected annually.) TABLE-3 (A) Correlations Investme nt Investment Import Market size .993(**)

G.R % 42 47 8 30 9 0 32

Pearson 1 Correlation Sig. (2-tailed) . .000 .000 N 8 8 8 Import Market Pearson .993(**) 1 .959(**) size Correlation Sig. (2-tailed) .000 . .000 N 8 8 8 Export Market Pearson .971(**) .959(**) 1 size Correlation Sig. (2-tailed) .000 .000 . N 8 8 8 ** Correlation is significant at the 0.01 level (2-tailed). TABLE-3(C)-Compound Model Result for Investments, Import & Export in US $ Billion) Linear Compound L C L Model Model Investment Import Export R Square 0.977 0.985 0.965 0.992 0.963 F Value 254.75 391.03 163.25 743.73 158.07 P Value 0.000 0.000 0.000 0.000 0.000 A 1.65 2.68 -0.721 1.09 0.78 B 1.03 1.18 1.24 1.33 0.49 ** denotes significant at 1 % level. Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org (Market sizeC 0.924 73.21 0.000** 1.206 1.203

Export Market size .971(**)

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Annual rise in Investment is 0.03 percent increased and annual growth 18 percent increased. In Import annually increased to 24 percent and growth by 33 percent. Annual rise in Export has been decreased and growth increased to 20 percent. TABLE -4 PASSENGER CAR, COMPANY WISE TRENDS IN SALES FROM 2003 TO 2010 - ( RS. Crore) Year Maruti Hyundai Tata Honda Ford GM Toyota Mahindra Suzuki Motor Motors Siel Car India Kirloskar Renault 2003- 04 10355.30 5490.52 3464.24 1516.33 1100.23 884.44 726.58 2004-05 12407.50 6930.17 4664.67 2525.26 1365.13 845.05 726.58 2005-06 13734.20 7867.72 5152.31 2928.83 1539.92 614.15 792.12 2006-07 16034.10 9283.09 6098.51 4634.08 2400.78 727.42 652.16 2007-08 19549.00 11179.41 6092.96 4835.12 2188.00 1716.45 641.50 2008-09 21186.56 16336.82 7100.00 4191.08 1865.00 1664.53 806.71 2009-10 29602.10 20565.81 9585.45 4850.82 2196.74 2052.18 806.71 Year 200304 200405 200506 200607 200708 200809 200910 Hindustan N.H International Cars Motors Fiat &Motors India 612.71 325.96 --802.42 625.41 597.80 609.45 492.74 517.33 325.96 -----3.47 ----1219.07 677.21 280.50

Premier Mercedes Total Total No .of Benz Sample Sales Sample India Pvt Companies cos. --335.15 1.55 7.14 16.85 9.70 9.48 29.56 498.58 493.59 643.84 922.26 956.84 1164.84 31092.87 34867.15 42296.41 51331.94 58591.13 77100.00 31100 11 35900 12 42300 15 51350 16 58600 16 77200 17

71.56 21.89 105.77 93.96 151.71 197.46 37.11 48.27

Source: CMIE April 2010.page 356 TABLE -4 (A) PASSENGER CAR COMPANY WISE TRENDS IN SALES FROM 2003 TO 2010 - ( RS. Crore) Descriptive Statistics N Minimum Maximum Mean Std. Deviation Maruti Suzuki 7 10355.30 29602.10 17552.6800 6551.60197 Hundai Motor 7 5490.52 20565.81 11093.3629 5471.66008 Tata Motor 7 3464.24 9585.45 6022.5914 1958.40021 Honda siel car 7 1516.33 4850.82 3640.2171 1319.38515 Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 32

Ford India GM Toyota Kirlosker Mahindra Hindustan motors N.H Fiet India International Cars and Motors Premier Mercedes Benz Total Sample companies Total Sales No. of samples cos Valid N (listwise)

7 7 7 3 7 6 5 6 7 6 6 6 3

1100.23 614.15 641.50 280.50 492.74 37.11 3.47 1.55 335.15 31092.87 31100.00 11.00

2400.78 2052.18 806.71 1219.07 802.42 325.96 197.46

1807.9714 1214.8886 736.0514 725.5933 608.2657 169.6783 73.0100

486.32894 577.24742 69.86429 471.15191 99.77975 126.85159 77.44004 9.75164 302.48816 17041.74720 16904.62708 2.42899

29.56 12.3800 1164.84 716.4429 77100.00 49213.2500 77200.00 49408.3333 17.00 14.5000

TABLE-4 (B): COMPANY WISE TRENDS IN SALES FROM 2003 TO 2010 TOTAL COMPANIES Linear Model Compound Model 0.947 0.988 71.34 329.61 0.001 0.000 9324.85 20884.0 8864.09 1.1969 TOTAL SALES Linear Model Compound Model 0.946 0.989 70.51 365.75 0.001 0.000** 9853.33 21214.4 8790.00 1.1941

R Square F Value P Value A B

Linear Model , companies trends in annual sales has been decreased to 12 % and in compound mode, l the growth rate has been increased to 19 % in last two years from 2009 to 2011. In Compound model, P value is significant. The composition of the domestic market makes India an attractive FDI destination for automobile components manufacturers. All the companies like Maruti, Hyundai, Tata motors, Honda Siel, GM and Toyota sales has been increased from 2003-04 to 2009-10, Mahindra Renault, sales started only from 2007-08 and decreased to only 280 Crore on 2009-10. It is because of poor car and petrol maintenance. Hindustan Motors car sales also decreased from 2007-08 to 2009-10 from Rs. 609 Crore to Rs. 517.33 Crore. Fiat sales also decreased on 2009-10 and has planned to look at strengthening ties in the near future, whether this will result in a cross-holding equity alliance on the lines of VW-Suzuki remain to be seen though observes say it is a strong possibility. It was in December 2009 when VW took nearly 20 percent in Suzuki while the latter settled for 2.5 percent as part of a cross holding deal. Mitsubishi, likewise has joined hands with Peugeot and reports have been doing the rounds that the two could end up working on a global car in India eventually,. Renaults cross-holding deal with Nissan has been the most successful alliance for years now. VW may not have quite got it right with Suzuki but has a host of other brands Skoda, Audi, MAN, Scandia and more recently Porsche. Maruti has increased sales and has already invested in developing infrastructure at Mundra port in Gujarat from where it exports A-star car to Europe.

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In addition to the favorable market and manufacturing environment in India, the presence of a large number of leading motor vehicle manufacturers has attracted a substantial base of non-Indian automotive parts producers . The size of the local vehicle assembly industry also offers sufficient production volumes to warrant the level of investment necessary to support component manufacturing operation in India.

TABLE-5- KEY STATISTISTICS FOR PASSENGER CARS FROM 2004 TO 2010 Year Production Export Exports Imports Imports Sales 000 nos Quantity Value Quantity Value Value 000 nos Rs. Crore 000 nos Rs. Crore Rs.Crore 2004-05 1030.1 20.8 433.1 0.1 1.7 31100 2005-06 1118.4 12.2 222.9 -1.8 35900 2006-07 1326.3 39.2 666.7 0.2 23.3 42300 2007-08 1543.0 40.4 646.9 0.2 21.9 51350 2008-09 1652.0 63.2 1370.0 0.1 13.3 58600 2009-10 2118.2 112.5 3275.7 -1.6 77200 Source: CMIE Industry Market size & shares, April 2011, Page 357. Tata Motors, Mercedes Benz, GM, Hindustan Motors, Fiat, ford India and Honda Siel Cards sales were estimated using production data from Society of India automobile Manufacturers. TABLE-5-(A)- Descriptive Statistics Production in 000's Export Quantity in '000 no. Export value in crores Import Quantity in '000 no. Import value in crores Sales values in crores Valid N (listwise) N Minimum Maximum Mean Std. Deviation 6 1030.10 2118.20 1464.6667 399.05635 6 12.20 112.50 48.0500 36.18827 6 222.90 3275.70 1102.5500 1132.57582 4 .10 .20 .1500 .05774 6 1.60 23.30 10.6000 10.33363 6 31100 77200 49408.33 16904.627 4

TABLE-5(B) Result(Curve Fit) for Production, Export quantity , Export Value and Sales Value: Using Compound & Linear Model: Year PRODUCTI PRODUCTIO ON N LINEAR COMPOUND 946.24 999.84 1153.61 1150.95 1360.98 1324.89 1568.35 1525.13 1775.72 1755.63 1983.10 2020.96 2190.47 2326.40 2397.84 2677.99 EXP_QT Y LINEAR 4.29 21.79 39.30 56.80 74.31 91.81 109.32 126.83 EXP_QTY COMPOUN D 14.46 21.21 31.10 45.62 66.91 98.13 143.93 211.10 EXP_VA L LINEAR -157.06 346.79 850.63 1354.47 1858.31 2362.16 2866.00 3369.84 EXP_VAL COMPOUN D 249.29 388.56 605.63 943.97 1471.33 2293.30 3574.49 5571.41 Page 34

2005 2006 2007 2008 2009 2010 2011 2012

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2013 2014 2015 11

2605.21 2812.58 3019.95 11

3082.73 3548.63 4084.95 11

144.33 161.84 179.34 11

309.61 454.10 666.01 11

3873.69 4377.53 4881.37 11

8683.95 13535.35 21097.03 11

TABLE-5-(C):Result for Production, Export Quantity & Value using Linear & compound Model: Linear Compound L C L C Model Model Production Export Quantity Export Value R Square 0.945 0.978 0.819 0.829 0.693 0.793 F Value 68.92 178.73 18.10 19.44 9.02 15.35 P Value 0.001 0.000 0.013 0.012 0.040 0.017 A 738.86 868.56 -13.220 9.8590 -660.90 159.93 B 207.37 1.15 17.50 1.46 503.84 1.55 Linear Mode l= Y = a + b t = 738.86 + 207.37 t Compound Model = Y = a + (b ) = 738.86 + (207.37 t) Annual rise = 7 per cent increased and Growth rate has been 15 percent also increased. In Export quantity also increased up to 46 percent this year, and value increased to 55 percent , Domestic sales value increased to 19 percent this year. In 2006, the industry produced 10.9 million vehicles, an increase of 16.22% over 2005. In 2005, production grew 14.5% over the previous year. The production of the automotive industry is expected to achieve a growth rate of Over 20 per cent in 2006-07 and about 15 percent in 2007-08. TABLE-5-(D) Result for Import Quantity, Value and Sales Value: Linear Compound L C L Model Model Import Quantity Import Value Sales Value R Square 0.29 0.29 0.28 0.051 0.946 F Value 0.06 0.06 0.12 0.21 70.51 P Value 0.831 0.831 0.749 0.667 0.001 A 0.13 0.12 7.34 3.22 18643.3 B 0.005 1.04 0.93 1.17 8790.00 **Denotes 1% significant level. C 0.989 365.75 0.000** 25332.9 1.19

TABLE-6- PASSENGER CAR AND MULTI UTILITY VEHICLES : PRODUCTION, SALES AND EXPORTS- MARCH 2010 TO MARCH 2011 Year Production Production Sales Sales % Export Export (Nos) (% (Nos) (% chg) (Nos) ( % chg) change) Mar 2010 2,36,608 23.9 2,39,935 20.6 40,281 19.2 Apr 2010 2,27,602 40.1 2,20,074 33.0 37893 28.6 May 2010 2,16,483 30.5 2,23,687 30.9 33112 11.3 June2010 2,09,191 24.9 2,19,242 22.5 37432 -2.3 July 2010 2,45,153 31.4 2,36,792 30.5 34699 2.7 Aug 2010 2,46,000 31.7 2,42,506 25.3 38279 -7.4 Sep 2010 2,51,417 28.8 2,50,528 21.3 34896 -1.05 Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 35

Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011

2,59,228 31.6 2,71,804 31.6 39847 2,33,233 10.3 2,33,969 13.0 31092 2,45,316 23.6 2,33,613 23.4 39928 2,60,363 18.3 2,66,936 18.0 32942 2,84,094 23.7 2,79,320 20.6 43799 3,08,617 30.4 2,96,938 23.8 51097 Apr-Mar Apr-Mar Apr-Mar Apr-Mar Apr-Mar 2010-10 2357411 28.2 2397478 27.0 446145 2010-11 2987296 26.7 2973900 24.0 453479 (Monthly figures may not add up to the cumulative total due to revisions. Sales includes exports.), Source: Monthly Review of Indian Economy, CMIE May 2011 Correlations - Table 6(A) Correlations

3.3 -22.8 -0.4 -14.7 19.4 26.9 Apr-Mar 32.9 1.6

Production Sales Exports Production Pearson Correlation 1 .953(**) .714(**) Sig. (2-tailed) . .000 .006 N 13 13 13 Sales Pearson Correlation .953(**) 1 .639(*) Sig. (2-tailed) .000 . .019 N 13 13 13 Exports Pearson Correlation .714(**) .639(*) 1 Sig. (2-tailed) .006 .019 . N 13 13 13 ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). Number of Production increased gradually from March 2010 to March 2011, from 23.9 % to 30.4 % and decreased in the month of November from 31.6 % to 10.3 % due to fuel hike and demand of materials. Sales also increased when compared to July 2010 , from 20.6% to 30.5 % and over all sales has been decreased from the year 2010 , 27 % to 24.0% in the year 2011. Number of Export has been decreased form the month April 2010 to January 2011. Total Export 32.9% on April 2010, slightly raised to 1.6% in the year March 2011. Overall production, sales and export value has been decreased due to Policy implication and fuel demand for the customers.

Exports: the cumulative annual growth rate of automotive exports during the period 2000-01 to 2005-06 was 32.92 per cent. Exports during 2006-2006 and 2007-2008 are Expected to grow over 20 percent. . Imports: Europe is the biggest importer of cars from India, while African nations largely account for the import of buses and trucks. China is most recently making inroads into this market.

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Sales: Passenger Vehicles: Growth in sales of passenger vehicles was 18.45% in 2006. This was almost three times the growth witnessed in 2005. Sale of passenger cars expanded by 20.0%. Export of passenger vehicles increased by 12.9% TABLE:7- IN DEPTH AUTOMOBILES-DIESEL VS PETROL Number of vehicles sold in the year 2011. DIESEL COMPANY BRANDS M&M Xylo, Scorpio, Verito Tata Motors Indica, Vista, Manza, Indigo Fiat Hyundai Suzuki Ford VW GM Linea, Punto I20, Verna Swift, Dzire Figo, Fiesta Polo, Vento Jetta, Passat Beat, Cruze SALES 115353 % PETROL BRANDS SALES 3,000 50,000 % 2.53 21.74

97.47 Verito

180,000 78.26 Indica, Vista, Manza, Indigo 6,500 50,000 61.90 Linea, Punto 45.45 I20, Verna

4,000 60,000

38.10 54.55

150,000 40.00 Swift, Dzire, SX4, Ritz 31,000 10,000 10500 27.93 Figo, Fiesta 20.00 Polo, Vento Jetta, Passat 18.92 Beat

225,000 60.00 80,000 40,000 45,000 72.07 80.00 81.08

Italys largest car maker fiat may have had a disastrous 15 years in the Indian car market, but it is more than making up for that with its dominance of car under the hood. Tata motors, Maruti Suzuki and General Motors(GM) , now powers their 16 variants, selling about 290,000 cars per annum. And it is the pivot on which Indias 2.2 million passenger vehicles market is fast turning into one of the worlds largest diesel car hubs. It powered 50 percent of all diesel cars sold in India in FY 2011. European companies such as Volkswagen (VW) , Mercedes Benz, BMW, Renault, Peugeot and Opel have traditionally been the flag bearers on the diesel engine, Japanese car makers Toyota, Honda, Suzuki, Nissan and Korean counterparts Hyundai have invariably preferred making petrol cars. American companies Ford ad GM make both smaller vehicles in petrol and largest ones in diesel, but tended to lean towards petrol vehicles. Toyota is also ramping up production from the current 200,000 units to 330,000 units by 2013. VW was able to sell 51,566 cars in 2011. Compared with only 4,000 in 2010.

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TABLE-8-TOTAL PASSENGER VEHICLES Year Production Domestic Exports Sales March 2010 2357411 1951333 446145 March 2011 2987296 2520421 453479 % Change 26.72 29.16 1.64 Source: Motor India May 2011 Statistics. Page-102. Total Passenger Vehicles sales, production and exports has been increased in 2011 shows the good revenue for automobile industries and shows improvement in FDI to India. Future plans: The Government has prepared a ten-year Automotive Mission Plan (AMP) to draw a future plan of action and remove obstacles in the way of competition, such as that required infrastructure be put in place well in time to alleviate its constraining impact on the growth. The plan envisages a tax holiday for the industry on investments exceeding $225,000, 100% tax deductions of export profits, and deductions of 50% on foreign-exchange earnings. It also calls for a one-stop clearance for foreign-direct-investment proposals in the sector and deductions of 30% of net income for 10 years for new industrial undertakings. To bring down the cost of power and fuel, which accounts for 6% of the manufacturing costs in the auto sector, captive power generation would be encouraged to enable industries to access reliable, quality and cost-effective power. (Business Line, Friday, March 08, 2010) Conclusion: The present study concludes that FDI inflows have shown significant growth in the post liberalization period. The compound annual growth rate of Actual FDI inflows during this period comes out to be as high as 29.56 percent. The analysis of structure of FDI in India reveals that after liberalization there definitely has been a shift in favor of service sector and a steep fall in the share of manufacturing sector. However, this trend matches the trend of change in the structure of FDI inflows to the developing countries and even the world. FDI inflows: Foreign Direct Inflows (FDI) is, however expected to continue to grow at a healthy pace. This is because the India economy is likely to grow at a faster pace than most international economies. Domestic lending rates have risen considerably over the past 3 to 5 months. FDI in portfolio investments dipped from an estimated $12.3 billion in the December 2010. A heartening feature of the changing automobile scene in India over the past five years is the newfound success and confidence of domestic manufacturers. They are no longer afraid of competition from the international auto majors. To conclude, the automobile sales are expected to experience a boom in the coming years and we might get to see a couple more automotive giants invading the Indian territories and locking horns with the Indian titans. The two factors that are having their impact felt in this segment are the growing buying power of the middle class and the low-interest EMI schemes. With the changing times, more technologically advanced and fuel efficient vehicles would crowd the city streets and rule the roost everywhere. What does the rise of diesel car mean for the petrol car manufacturers? The Japanese and the Koreans have reason to worry because they have already made investments on petrol engines in India. It is all about the running cost of diesel cars that has people interested in buying them. Because Renault is also bring in a diesel batch back and sedan, with the same DCI engine that goes into the Nissan Micra. Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 38

Both Honda and Toyota petrol players whom have lost their market share. Diesel cars have an overwhelming 75.2: 25 majority among all vehicles that are sold with both petrol and diesel variants. To get better Grades, plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors. The FDI inflows in August 2009 were USD 3.26 billion. Contrary to smart recovery in the domestic economy and a rebound in exports, overseas investment show a slackening trend in the current fiscal year. For the April-August period of 2010-11, FDI inflows declined by 35 per cent to USD 8.92 billion compared to USD 13.8 Billion in the same period last year. Global economic recovery is one of the reasons For declining FDI in India. "The main reason for the decline in FDI is slump in the major western economies like the US and Europe. This is not a good news for Indian economy. This reflects that global economic recovery is still fragile and some impact of that would be reflected in FDI. (DK Joshi, Crisil Chief economist). Passenger Car: Currently there are diesel cars with a price tag of Rs. 4 lakh and more. Th Nano, expected at sub-Rs. 3 lakh could just shape up the market. Korean have reasons to worry because they have already made investments on petrol engines in India. Demand for diesel vehicles has increased so much that it has more than made up for the fall in demand for petrol vehicles. Nearly 3,000 VW Polo petrol variants remain in the stockyard unsold. Ramping of production of its diesel cars is not difficult for VW as all engines are imported from Germany. In September 2011 petrol rates and interests rates are high for loans, buyers are likely to go for diesel cars for their running cost. FDI Policy Implications: The structure of India's auto industry is unique when compared to other developed economies. Besides a strong four-wheeler market, India also has sizeable two-wheeler, threewheeler and commercial truck markets. The country rolled out a total of 8.5 million vehicles in 2004, of which 1.2 million were passenger cars and multi-utility vehicles. By 2010, India will be a two million passenger-car market and will become a three million market by 2015, according to Roland Berger Strategy Consultants. If only India had previously developed an adequate road infrastructure, these volumes could have already been reached. Purchasing power for such volumes exists today, but road development is moving at a far slower pace. Although the foundation for a strong passenger-car industry was laid in the early 1990s, real momentum has been building only since 2000, when the government significantly changed its policies, taking steps to make manufacturing more internationally competitive by creating export promotion zones and expanding infrastructure. India also freed industry from excessive regulations five years ago. Its stance toward foreign direct investment also became less restrictive. In China a joint venture is required for domestic production. India's auto FDI policy, on the other hand, allows global DEMs to have 100% ownership, which has created a healthy industry from the start. The Indian market therefore is full of real players and not "aspirers." REFERENCES http://www.fadaweb.com/autoind_june10.htm and 6 htm. http://www.oecd.org/dataoecd/53/35/40301081.pdf http://www.surfindia.com/automobile/automobile-history.html http://www.siamindia.com/scripts/market-share.aspx http://ezinearticles.com/?Automobile-Sector---The-Indian- cenario-772205 http://business.mapsofindia.com/fdi-india/sectors/automobile-industry.html

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1. Aditya KR Bajaj and Swastik Nigam (Dec 2007) Globalization in the Indian Pharmaceutical Industry FDI spillovers and implications on Domestic Productivity: 1991-2007, is a research project done under IIM Ahmedabad. 2. Aiyar, S. (2003) The Unintended Consequences of FDI The Times of India, 28th. June 2010. 3. Athreye, S. and S. Kapur (2001) Private Foreign Investment in India: Pain or Panacea? The World Economy, vol. 34, no.3, pp. 399-424. 4. Anjan Ghosh, Subrata Ray, Shamsher ,Dewan, Anupama Arora, anupama@icraindia.com.ICRA, Feature Of Indian Passenger Vehicle Industry: Long Term Demand Outlook Remains Robust Icra Rating Services p-2.-2010. 5. Aravindan Mukerjee and Tricochan (1996). The automotive Industry, In Emerging Economics:-a Comparison of Korea. Brazil, China, and India-Indian Institute of Management, Ahemedabad-380015, India, March 1996. 6. Arun. K. Jain,( 2009) International Business, Sixth Edition, The MC Graw Hilll Co, P-296. 7. Balasubramanyam, V. N., Salisu, M. and Sapsford, D. (1999). Foreign Direct Investment as an Engine of Growth. Journal of International Trade and Economic Development 8, 27-40. 8. Bhattacharya, A. Montiel, P.J. and Sharma, S. (1996) Private Capital Flows to SubSaharan Africa: An Overview of Trends and Determinants, unpublished paper, World Bank, Washington DC 9. Broadman, H.G. and Sun, X. (1997) The Distribution of Foreign Direct Investment in China, Policy Research Working Paper No.1720, World Bank. 10. Bilesha B. Weeraratne, Solving the Forward Discount Bias Puzzle in a Small Open Developing Economy: Evidence from Sri Lanka, South Asia Economic Journal, March 2011; vol. 12, 1: pp. 61-89. 11. Chaturvedi, Jaipuria Institute of Management, Ghaziabad, Role of FDI in Economic Development of India: Sectoral Analysis, International Conference on Technology and Business Management March 28-30, 2011, ,p528-533. 12. Dijkstra, A. Geske. 2000. Trade Liberalization and Industrial Development in Latin America, World Development, vol. 28, no. 9, pp. 1567-1582. 13. Feinberg, Susan & Majumdar, Sumit K. 2001. Technology spillovers from foreign direct investment in the Indian pharmaceutical industry, Journal of International Business Studies, vol. 32, no. 3 (Third Quarter), pp. 421-437 14. Globerman, Steven & Shapiro, Daniel, 2002. "Global Foreign Direct Investment Flows: The Role of Governance Infrastructure," World Development, Elsevier, vol. 30(11), pages 1899-1919, November. 15. Ganesh Babu Kumaran* Tercera poca , Role of Multinational Corporations in Automobile Industries: A Comparative Study Between India and Mexico Vo ul men 2 Nmero 3 Enero / Junio 2 8 Col mi a, Mxico.p-131-163. 16. Jaya Gupta(2007), Gloablisationa and Indian Economy: Sector-wise Analysis, of FDI inflows. 17. Jayaprakash Pradhana (November 2007), A Study on Indian Automotive- Outward FDI knowledge flows, University Libarary-Munich, Paper no-12332, p252. 18. Krishna Chaitanya Vadlamannati, Indian Economic Reforms and Foreign Direct Investment How Much Difference Do they Make to Neighbours? South Asia Economic Journal, January/June 2009; vol. 10, 1: pp. 31-59. 19. Lucas, R. (1993) On the Determinants of Direct Foreign Investment: Evidence from East and Southeast Asia, World Development 21(3) Volume:01, Number:01, Nov-2011 www.theinternationaljournal.org Page 40

20. Shita Mahtani-the Indian 4 Wheeler Industry p-1-10.year-2010 21. Sowmya Suman-Indian Automobile Industry ProgessArticle-2010) 22. Shri Vishnu Mathur, Director General, SIAM on industry performance at Automotive Mission Plan 2006-16. 23. Shri Srivats Ram, President, ACMA, performance of Auto Component Industry 201011. New Delhi 24. Shri Ambuj Sharma, JS, DHI , DCAAI-Chairman-2011 , at the meeting, New Delhi.) 25. Vijaya Ramachandran and Jeffery Goebel, Consultants, Center for International Development, Harvard University, Foreign Direct Investment In Tamil Nadu: Review And Comparison Across Host Sites , January 2002 26. Ramkishen S. Rajan. A, , Sunil Rongala, b, and Ramya Ghosh, , Attracting Foreign Direct Investment (FDI) to India , George Mason University, Virginia, USA. E-mail: rrajan1@gmu.edu . April 2008. 27. Reserve Bank of India (2002), Report of the Committee on Compilation of Foreign Direct Investment in India. 28. Root, F. & A. Ahmed (1979) - Empirical determinants of Manufacturing Direct Foreign Investment in Developing Countries, Economic development and Cultural Change 27 29. Syed Khaja Safiuddin,(2010) Foreign Direct Investment Inflows in IndiaOpportunities and Benefits, Global Journal of Finance and Management, Volume 2, Number 2 , pp. 245-259 30. Special Report: The Global Car Industry - Extinction of the Predator, The Economist, September , 10th, 2005, pp. 63-65. 31. Srivastava, S. (2003) What is the True Level of FDI Flows to India Economic and Political Weekly, 15 February. 32. Schneider, F. & B. Frey (1985) - Economic and Political Determinants of Foreign Direct Investment, World Development 13(2) 33. Te Velde, D.W. (2001). Policies Towards Foreign Direct Investment in Developing Countries: Emerging Issues and Outstanding Issues, London: Overseas Development Institute. ***

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