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Ford leaves India, prompting question about capital intensity and industry

The higher the capital intensity the fewer the number of companies an industry is able to support.

Ford
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Ford Photo: Reuters

T C A Srinivasa-Raghavan
How many producers can an industry support? This is a very old question in economics, which gains salience once again after the announcement by Ford Motors that it will stop production in India. 

I should add here that I used the Ford Fiesta for 12 years from 2008--two cars in succession--and found it to be an excellent vehicle. Then, for some reason, Ford fiddled with the model making it smaller and I stopped buying. 

Anyway, several other auto companies have also stopped operating in India over the last decade. But without going into the specifics of each exit, it is
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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