The profile of the Indian Passenger Car industry is very different from what it is worldwide. Car industry is considered as a luxury product and it was treated with restrain. Categories of vehicles were limited to three passenger cars namely Fiat, Hindustan and Standard. Slowly foreign collaborations were permitted with equity participation in 1968. In 19870’s a series of liberal policy changes were rapidly introduced marking a crucial turning point for the automobile industry. The Indian Government announced “broad banding” policy in 1985 which gave new licenses to broad groups of automotive products such as two and four wheeled vehicles. The deli censing of the industry in 1993 opened the gates to a flood of international automakers. Many foreign manufacturers have concentrated on the premium and recently the mid car segment. Even though the Passenger car industry is having a competitive advantage, still it has to face lot of challenges in the forthcoming years to lead ahead in this industry.