Please use this identifier to cite or link to this item: https://repository.iimb.ac.in/handle/2074/16695
Title: Global value networks: Case study of the Indian auto industry
Authors: Dash, Ankita 
Chanda, Rupa 
Keywords: Global value chains;Networks;Automotive industry;Trade
Issue Date: 2020
Publisher: Indian Institute of Management Bangalore
Series/Report no.: IIMB Working Paper-627
Abstract: Much of international trade today happens through Global Value Chains (GVCs) wherein companies restructure and relocate their operations across geographies to leverage locational advantages and realize greater returns and efficiency in their production processes. Within these GVCs, there are global value networks that exist across countries for a given industry, which help highlight the relative position of a country and the corresponding importance of other countries in a country’s industry. This paper attempts to map the global value network for the Indian automotive industry. It provides a descriptive analysis of the industry’s flow of value and the relative standing of India’s partner countries in these flows, using network analysis. We analyse GVC trends in this industry for India by charting the overall as well as segment-wise flow of value in the international market. We then map the domestic network of firms as well as the foreign partners to identify central nodes, important sub-groups, and influential geographies. Our network analysis indicates that in terms of geographies, India’s firm-level linkages with the Western world are more robust with strong bi-directional flow of final goods and components while corresponding connections with Asian counterparts show greater one-way dependence. In terms of segments, we find that although India is a strong player in the components manufacturing space, its firms are mostly present in the lower value-added segments which face tough competition from their Asian counterparts. India’s presence is weak in the in the higher value-added segments (Tier-1), where the scope for domestic value addition is high, indicating limitations regarding innovation and cost-effective manufacturing and export of critical components. We infer that the dominance of small and medium enterprises in India’s automotive industry and their constraints in terms of scale, low levels of investment, poor research and development, and mediocre technology have manifested themselves in the Indian industry’s global performance. Our study points to several areas for further research including understanding the role of trade agreements, FDI flows, domestic and external barriers, and the capacitation of MSMEs to enable GVC participation and movement up the value chain in sectors such as the automotive industry.
URI: https://repository.iimb.ac.in/handle/2074/16695
Appears in Collections:2020

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