Technology Transfer and Absorptive Capacity of India’s Automobile Industry

The study intends to capture the factors determining absorptive capacity of a subsidiary firm in the automobile industry of India. The selected six manufacturing firms from passenger car segment of Indian automobile industry are analysed. CAGR (compound annual growth rate) of expenditure on imported raw materials, the R & D (research & development) intensity of the selected firms, royalty intensity, and expenses for training of staff are the major measures used to understand the absorptive capacity of the subsidiary firms. CAGR (compound annual growth rate) of the expenditure of firms on the imported raw materials shows no significant rise. Moreover all firms’ data gives very low R & D intensity. Though there is no significant rise in the import of raw materials, the expenditure on royalty rises relatively. The study reveals that firms show very low absorptive capacity as all indicators performs low. The article also discusses the major determinants of technology transfers theoretically. Persistent and bold policy measures are necessary to grow ourselves as innovators.