From correspondents in Delhi, India, 05:01 PM IST

The automotive industry in India is rising but it has not been able to innovate to sustain international competition, said the Economic Survey 2006-07.

'The major challenges that the auto industry is presently facing is with respect to its capability to innovate and upgrade in order to remain competitive (both qualitatively and price wise) in the international market,' said the report tabled by Finance Minister P. Chidambaram in parliament Tuesday.

The industry produced 1.7 million four wheelers (passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps) and over 8 million two and three wheelers (scooters, motor-cycles, mopeds and three-wheelers) in 2005-06.

Currently, there are 500 firms in the organised sector and more than 10,000 in the unorganised sector of the auto component industry.

'The automobile auto component industry has the capability to manufacture an entire range of auto parts and has rapidly added to its capacity base.

The sector has registered a growth in turnover from $3.1 billion to $10 billion between 1997-98 and 2005-06.

The survey has lauded the rising exports of the industry, which reached $1.8 billion in 2005-06 and India's capability to export in developed markets such as US and Europe.

It said the government has taken necessary initiative to boost the sector and making India a preferred destination for design and manufacture of automobile and automotive components.

(Staff Writer, © IANS)