2023-04-30 08:48:30
The government is putting in place mechanisms to factor in the dynamics of a highly price-sensitive Indian automobile market that pushed American auto giants like General Motors and Ford to shut shop in India.
According to Minister of Heavy Industries (MHI), Mahendra Nath Pandey, there will be more proactive exchange with the industry to tailor policy towards the ultimate goal of creating economies of scale and pushing the automobile industry up the value chain in higher value-added products.
In an interview with businessline, the Minister said MHI is looking to proactively take industry feedback in a regular manner to understand and incorporate the changes in market dynamics so as to make policies industry-friendly as the auto industry in India is everchanging.
“However, foreign companies may learn from the example of Ford and GM, relook at the product launch pricing to understand the nerve of the Indian price-sensitive customers that will drive the market demand and export competitiveness,” he said.
Pandey said that the government’s several schemes are already in place now for enhancing India’s manufacturing capabilities for automobile and auto components industry.
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For instance, the government has approved the production-linked incentive (PLI) scheme for Advanced Automotive Products with a budgetary outlay of ₹25,938 crore. The PLI scheme for Automobile and Auto Components proposes financial incentives to boost domestic manufacturing of Advanced Automotive Technology products and attract investments in the automotive manufacturing value chain.
“Its prime objectives include overcoming cost disabilities, creating economies of scale, and building a robust supply chain in areas of Advanced Automotive Technology products. It will also generate employment. This scheme will facilitate the automobile industry to move up the value chain into higher value-added products,” he said.
In the area of battery cells for electric vehicles, since India is heavily reliant on the international market, the government has introduced PLI scheme for the manufacturing of Advance Chemistry Cell (ACC) in India (approved by the Cabinet in May, 2021) and the scheme has been notified with the total outlay of ₹18,100 crore for five years.
“The PLI scheme for ACC battery envisages incentivising large domestic and international players in establishing a competitive ACC battery set-up in the country as battery cost constitutes typically 40 per cent cost of an electric vehicle and now with this, battery prices are falling,” Pandey added.
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