Why India did not become a 1-car country

This is a companion piece to an earlier post How India Became A 3-Car Country For 30 Years. It was entirely an outcome of government policy:

“Back in 1953, an advisory body called Tariff Commission recommended that ‘the manufacture of automobiles should be restricted to a few firms.’ The motive was to transform India into a manufacturing country. If only a few car models were allowed, each one of them would sell in larger numbers, bringing economies of scale to encourage local manufacturing.”

But while Government of India decided that “as far as passenger cars are concerned, the manufacturing units should concentrate on Hindustan Landmaster (now Hindustan Ambassador), Fiat 1100 and Standard Vanguard,” there were many members of Parliament who wanted this list further trimmed to just one car model to attain economies of scale.

“We have neither the capacity nor the finances, nor even the technical manpower to man three units which we are having at present,” said Bombay (now Mumbai) parliamentarian Chandulal Pitamberdas Parikh during a debate in November 1957. “If we have only one and concentrate on one model, I think by 1961 we shall be able to export and make the cars cheaper.”

Agreeing with Parikh, fellow MP Kishen Chand said, “I do request the honourable minister to have only one make of car. They may have outside bodies of different shapes, but only one engine and one transmission should be there.”

P D Himatsingka, a West Bengal MP, said, “If we can reduce the number to one, so much the better. But if that is not possible, then let there be two models or so…The natural sequence is to reduce the number of models, reduce the expenses and reduce the price.”

Limiting Choice

The government itself had followed this line of thinking while licensing factories for trucks, buses and jeeps. There were altogether six makes, but industry minister Manubhai Shah explained how “these six are not really six but that each one is a specialty of its own.”

Ashok Leyland were to make “large single-deck passenger cars (buses) and double-deck passenger cars and heavy freight trucks…there is no other manufacturer of that variety in the whole country.”

Only one group, Mahindra & Mahindra had been allowed to make jeeps. “Jeep is now a cross-country vehicle so important in such a vast country as ours with lack of roads, jungles, hill tracts and all that.”

Tata Mercedes-Benz were “the only manufacturer of diesel trucks.”

Premier were “making Dodge and Plymouth vehicles, both more or less the same, with petrol engines.”

Hindustan Motors were “negotiating with General Motors for Chevrolet andBedford.”

The government’s plan was: “We are covering the range of the medium type (truck) between these three units, one petrol truck and two diesel trucks; if General Motors do not come in, only one diesel truck.”

Exception For Cars

So why did the government resist the demand to have only one type of car in India? It didn’t really have a choice.

The Economic Weekly of March 2, 1957 had pointed out: “The Tariff Commission has had to accept the situation as it was and give its approval to the manufacture of cars for which sponsors were already available. A selection on the basis of first come, first served.”

There was nothing common between the three cars. Shah said, “Amalgamation will represent no economy, because the machinery of each of them is entirely different. It is not as if we can manufacture more by bringing all of them in one place or putting the same model even if the three (factories) are retained at different places under one amalgamated management.”

It is not as if we can manufacture more by bringing all of them in one place or putting the same model even if the three (factories) are retained at different places under one amalgamated management

The way to make only one model was to shut down the other two factories, but beyond this industrial consideration Shah also brought some sense of market to the debate:

“In this matter of passenger cars, there is a little consumers’ preference also, and a little competition should be necessarily brought in…One single manufacturer, howsoever efficient and howsoever well-guided by government and by his own efforts, will not be able to produce satisfactory results.”

Cosmetic Choice

The choice government wanted the car buyer to have was only outward. Cars might look different but the government wanted them to be the same under the skin, like the planned trucks and buses.

“The present policy is designed to see that we restrict the number (of cars) to the existing only three, and there also we will try and see that the interchangeability of parts or what is known as commonality of parts is continuously increased.”

Henry Ford said you could have his cars in any colour so long as it was black, the Indian government was planning to give buyers a choice of cars that were all the same inside. The market stagnated for 30 years but luckily things never got that bad.



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