Finance minister Pranab Mukherjee estimates growth this year at 7%-plus, indicating a recovery from the slowdown caused by the financial crisis, after the fastest economic expansion in 15 months in the July-September quarter.

India’s auto industry was in any case among the first sectors to recover from the slump. Auto sales have surged 18% to 7.8 million in the eight months from April to November. Passenger vehicles sales have gone up 21% to 1.2 million.

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Kapil Arora, partner at consulting firm Ernst and Young, says a 5-10% market share target in the initial years of the launch, would be ambitious. “Factors like a strong brand reputation, wide reach and pricing advantage will give the existing players like Maruti and Hyundai, an advantage over the new ones,” he said.

The new entrants will add capacity of half-a-million cars in the next two to three years, saddling the industry with excess capacity by 2012-13, according to Dilip Chenoy, director general at the Society of Indian Automobile Manufacturers, a lobby group. While the models will also be exported to other emerging markets, they will come on top of the 1.5 million cars sold locally in the year to 31 March. The slack will be picked up by 2014-15, Chenoy said. “While the big three (Maruti, Hyundai and Tata Motors) will lose market share, the overall market will grow.”