The automobile industry is a prominent part of the manufacturing sector and considered to be an indicator of economic development of any country. It is also a technology and knowledge intensive industry because it demands high performance and quality parts. In India also the automobile industry occupies a prominent place due to its deep forward and backward linkages with many key segments of the economy. This industry has a strong multiplier effect and is capable of being the driver of economic growth. The performance of the automobile industry can be correlated to the health of the economy. A sound transportation system, to which the automobile industry is linked, plays a pivotal role in the country’s rapid economic and industrial development. The prime objective of this paper is to analyse the growth pattern and economic impact of automobile industry on Indian economy.