PLI scheme to be rewarding for auto industry over 2020-25 period, says Fitch Solutions

Fitch Solutions Country Risk and Industry Research on Friday stated the federal government’s determination to increase the production-linked incentive (PLI) scheme to the car business would supply vital advantages to the sector over the following 5 years.

It, nevertheless, famous that a few of the operational dangers current within the nation would nonetheless stay a problem for a lot of buyers regardless of the inducement.

“We believe that this policy provides significant upside potential for India’s autos manufacturing industry over 2020-2025, especially in the field of electric vehicles (EVs) and the associated supply chains,” Fitch Solutions Country Risk and Industry Research stated in an announcement.

Citing Federation of Automobile Dealers Associations (FADA), it famous that the home automotive business is about to obtain a big portion of this incentive fund over the five-year interval round Rs 570 billion.

“However, we note that the elevated operational risks present in the country will remain a challenge for many investors. Our operational risk team believes that businesses operating in the country will continue to face additional structural risks stemming from legal risks, security gaps, excessive bureaucracy and patchy utility infrastructure, all of which currently increase the costs of operating in India, particularly compared with China,” Fitch Solutions Country Risk and Industry Research stated.

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This implies that whereas these incentives have the potential to supply a major enhance to the nation’s automotive business, it’ll proceed to fall brief in realising its full potential given the restricted progress in tackling the structural challenges within the nation, it added.

On November 11, the Cabinet authorised PLI for 10 extra sectors, together with auto and prescribed drugs, with an outlay of about Rs 1,45,980 crore over a interval of 5 years.

Under one other PLI scheme, an outlay of Rs 51,311 crore has already been authorised.