I am a great believer of conspiracy theories. That's why I continue to believe that the automotive sections in the last central government budget were penned under heavy Maruti influence (also under heavy alcohol influence, I presume) in the way they significantly benefitted the Numero Uno carmaker in India. Looking at how many Maruti models benefitted (and how many competitor models were shafted) overnight due to excise duty exemptions, the budget sure was good news for the company.

Or was it?

Look at the long-term prospects. Everything was fine, all carmakers were merrily working on their confused action plans for India, and Maruti was singing a happy note, till the government dropped a bombshell in the form of the budget. Think of it, all the carmakers were clueless about what to do in India and then suddenly the government gave them ideas. After the initial shock (and the accompanying howling), everyone picked themselves up, dusted their clothes and then knew what to do.

Make small cars.

The government also told the new big guys like Volkswagen that small cars are the only way to big volumes in India.

Remember, the big guys who had entered the market ten years back (guys like GM and Ford and Toyota and Honda and Mitsubishi and Skoda) were still grappling with selling B and C segment cars in a market that was predomianntly A segment, and had things stayed put, would have continued selling the same for another decade while happily reporting a 20% growth in sales on a base of 20,000 cars per year. That, in a market where last year's automotive sales crossed the million units mark.

The government (and Maruti) actually told them what to do.

So now every company is investing top dollar in developing small cars for India. Ford is doing one, GM has already launched one and is developing another, Honda is doing one, Toyota ditto, Skoda will share the VW cheap vehicle concept and even a non-entity like Mitsubishi is keen on one. Not to mention Renault-Nissan-Bajaj / Mahindra and domestic players like Tata.

Maruti suddenly has so much competition coming up in the next two years, something that could have been delayed by another five years.

If not for the over-eagerness of the government to please Maruti.