New Delhi: India pipped China in auto exports and is set become a leader in small cars. China, in contrast, is more of a big car producer and has been hit by the global recession.

“Among major reasons for India is a favourable investment regime. While India allows for 100% FDI in the automobile sector, in China you can only be present through a joint venture with a local partner. If you use the country as a major export base, you have to share the profits with your joint venture partner, which no company would like to do,” said Rakesh Batra, of Ernst & Young .

And while sharing profits may be a major reason, analysts point out that sharing technology with the JV partner may also be a cause of concern in China, considering the infamous expertise of its companies in culling out cheaper fakes at lower costs, even as they may be of a lower quality. India also scores due to its superiority in research and development brains. “While China may be good at producing in massscale from a given design, India holds the edge in developing new technology products that makes vehicles produced here higher in quality and more suited to advanced European markets. Also, production of a new small car model is cheaper in India compared to that in Europe,” another analyst said.

Batra points out that India’s “geographical proximity” to key markets like Europe and Africa is also another reason for companies to use it as an export hub. TNN