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The auto sector will receive sops worth  ₹57,000 cr under the scheme to boost output. (MINT_PRINT)
The auto sector will receive sops worth 57,000 cr under the scheme to boost output. (MINT_PRINT)

Automakers vie for output sops

  • Enthused by the prospects of growing exports and utilizing excess capacity, executives at firms such as Tata Motors, M&M, Renault, Nissan Motor and Skoda Auto have begun scouting for opportunities in Europe, America and Africa

Several automakers in India are exploring ways to boost exports to help them qualify for subsidies under a government scheme to promote local manufacturing, three people directly aware of the developments said.

Enthused by the prospects of growing exports and utilizing excess capacity, executives at firms such as Tata Motors Ltd, Mahindra and Mahindra Ltd, Renault India Pvt. Ltd, Nissan Motor India Ltd and Skoda Auto Volkswagen India Pvt. Ltd have begun scouting for opportunities in Europe, America and Africa, the people cited above said, asking not to be named.

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The government had on 11 November announced a production-linked incentive (PLI) scheme of about 2 trillion to encourage firms in 10 sectors to boost manufacturing in India. The automotive sector comprising vehicle makers and their parts suppliers will receive subsidies worth 57,000 crore—the biggest chunk of the scheme.

The government has been pushing for a reduction in the imports of components, especially from China, and an increase in exports of vehicles and parts from India. Prime Minister Narendra Modi also launched the Atmanirbhar campaign to promote local manufacturing and exports.

Most automakers have started looking at opportunities to maximize exports, which will allow them to qualify for the PLI scheme, said one of the people cited above.

“Some are also working with consulting firms on how and where exports can be increased from India. Though the parameters are not known, senior bureaucrats in charge have told automakers that export-related revenues will be taken into consideration while choosing beneficiaries," the person said.

A spokesperson for Nissan Motor India said the company will continue to focus on exports and make India its major export hub and leverage competitiveness of its plant outside Chennai to support markets in the region.

“The Nissan Magnite is the first made for India B-SUV on our ‘Make in India, Make for the World’ philosophy, and we are exploring export opportunities," the spokesperson said.

A spokesperson for Tata Motors said PLI scheme will promote “the potential and ambition" of India’s auto sector.

“At Tata Motors, we offer mobility solutions across geographies and have more than 8.5 million Tata branded vehicles plying in 175-countries. We will continue to seek new markets," the spokesperson said in an emailed response to queries.

Queries emailed to spokespeople of M&M, Skoda Auto Volkswagen and Renault India remained unanswered.

The second person cited above said the PLI scheme will indirectly promote exports, and automakers will be able to better utilize idle capacities and offset slower sales in the local market.

“Most manufacturers don’t want to depend on Indian market for survival, and companies like Ford, Nissan and Volkswagen have been reasonable big exporters from India. Also, most have excess capacity, and the local demand won’t be back to 2018 levels till another two years. Hence, some upcoming products of Nissan, Renault Volkswagen and others could be exported to qualify for sops," the person said.

Amid the enthusiasm, some industry executives are also cautious as finer details of the scheme are still not public.

“The scheme has been devised to indirectly support firms who export, but we still don’t know what will be the threshold and how stringent it will be. Having said that, most firms are looking to enhance exports in the coming years to qualify for the incentives," the person said.


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