RBI ESINABARD ESISEBI
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Vision for Growth in Automotive Exports
- India aims to triple its automotive components exports to $60 billion in the next five years, positioning itself as a global leader in the sector.
- Achieving this goal would result in a trade surplus of nearly $25 billion and increase India’s share in the global automotive components value chain from 3% to 8%.
- The growth is expected to create 22.5 million new jobs, bringing the total direct employment in the sector to 34 million.
Policy Recommendations for Achieving Growth
- Strategic and Focused Policy Initiatives: The NITI Aayog report stresses the need for high-value automotive manufacturing and strong policy support.
- Production Support Scheme: The scheme would include:
- Operating expenditure support for scaling up manufacturing of specific components.
- Capital expenditure support for tools and dies required in manufacturing.
- Non-Fiscal Interventions: These include:
- Business improvement support to enhance global competitiveness.
- Promotion of joint ventures and free trade agreements (FTAs) to foster international collaborations.
- Adoption of Industry 4.0 technologies to improve manufacturing efficiency.
- Implementation of enhanced quality standards to meet global demands.
Focus on Research & Development (R&D)
- The report emphasizes the need for a vibrant R&D ecosystem in the auto components sector.
- Strategic R&D support with financial incentives across product categories is recommended.
- Building globally competitive Indian auto component manufacturers requires continuous innovation through R&D.
Encouraging Skilled Workforce and Global Talent
- To support innovation, India should implement incentives for skilled foreign nationals to come to India, alongside initiatives to retain highly skilled Indians.
- The NITI Aayog suggests offering incentives similar to China’s Thousand Talents Program, such as:
- Right to purchase residence for foreigners.
- Streamlined visa processes.
- Guaranteed long-term employment opportunities.
- The NITI Aayog suggests offering incentives similar to China’s Thousand Talents Program, such as:
Fiscal Support and Reassessing Returns from Government Schemes
- NITI Aayog noted the ongoing support from various government schemes, including:
- FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles).
- PM EDRIVE (PM Electric Drive Revolution in Innovative Vehicle Enhancement).
- Production-linked incentive (PLI) for auto components.
- Suman Bery, NITI Aayog Vice-Chairman, stressed the importance of reflecting on the returns from these schemes, ensuring that India receives a reasonable tax return flow within a reasonable timeframe.
Addressing Competition and Localisation
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- While localisation remains crucial, the report advocates for a balance with competition to drive innovation.
- India must rethink its competition policy to stay at the frontier of the automotive sector.
- Local champions of the automotive industry should not be shielded indefinitely; instead, policies should encourage competition and innovation.
