Its a complicated issue. When you talk about size and competition, then India's perfect contendor for comparison, size wise would be CHINA, not Pakistan. Taking that into account, both India and China have been Independent since late 1940s, and have more or less similar policies, in terms of Industrialization. Both had gotten alot of help from USSR, during the cold war, to develop their BASIC Industrial Infrastructure. Both had 5-Year Development Plans. Both had steady Governments, heavily backing the industrial process.
Both have similar demographics. Both India and China have 60% to 65% populations in rural area. Auto Industry wise, China is making 5 Million+ cars a year, while India has recently touched the 1 Million cars a year mark.
Pakistan, although had a very good start in 1960s, when Chrysler, Ford and Jeep were being assembled in Pakistan. Plus a local Motorbike maker Kohinoor was already making Motorbikes locally on their own in Pakistan in 1960s.
Believe it or not, Pakistan was ahead of South Korea in 1960s, but 1970s Nationalization and dirty politics have set Pakistan back alot.
The Arab Israeli War, and America's step away from Progressive Muslim countries, like Pakistan and Iran during 1970s, has also set back Pakistan. But now, after the 2001, the country is Seriously back on path of Industrialization after almost 30 Years of chaos, started in early 1970s (around time of Break away of Bangladesh).
Hopefully, this new trend in Industrialization would continue for a long time.
About Sitara. This just shows the DYNAMISM and entrepreneaurial spirit of Pakistanis, being REVIVED once more. This is the waking up process. Don't forget the Adam Motors, and TEIL's TMC group along with Toyota, Honda, Kia, Hyundai, etc. that are progressively making cars in Pakistan.
Toyota has recently announced to include Pakistan in IMV (Intenational Multipurpose Vehicle), project. That project basically includes Asian countries like, Thailand, Malasia, Indonesia, Vietnam, India, Pakistan, and other countries also like South Africa, and Argentina, where Toyota will diversify its local production for Global needs, moving away from Japan Based R&D to more localized input in designing and production of Toyota vehicles.
A good sign all in all.
Lets all hope for the best.