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Auto Inc pushes for local manufacturing, investing in new technology

Auto Bytes May 2022 delves deep into the automotive industry’s readiness towards going local and making investments for domestic production and new technologies


The Indian automobile industry is one of the prime movers of the manufacturing sector and a significant driver of macroeconomic growth, technological development and the Make in India initiative. It aims to increase vehicle exports by five times and is projected to be the world’s third-largest automotive market in terms of volume by 2026. According to
the Grant Thornton Bharat Auto Bytes report, the industry is poised to receive an impetus from the total budgetary allocation of INR 3300.06 crore for the financial year 2022-23 towards the Ministry of Heavy Industries.

Saket Mehra, Partner and Automotive Sector Leader, Grant Thornton Bharat says, “To meet the future needs of customers (including the electrical vehicles) and stay ahead of the competition, Indian manufacturers are now catching up on upgradation, digitisation and automation. The promotion of exports has consistently been part of the OEMs’ business strategies for better utilisation of installed capacities. Companies which have had partnerships with foreign players or received FDI have benefitted in terms of engagement in global value chains (GVCs).”

India selected 20 automobile and auto component companies for incentives worth nearly INR 260 billion to boost local manufacturing under the PLI scheme as notified in September 2021. The selected
companies have committed investments worth around INR 450.16 billion. The incentives are available for local production and sales of advanced automotive technology products, including vehicles and components for five years starting April 2022.

Flex-fuel vehicles (FFVs), which are capable of running on 100% ethanol and gasoline along with the green hydrogen fuel cell electric vehicle (FCEV) are also being indigenously developed to create a green hydrogen-based ecosystem in the country. The current policy debate in India is around enabling greater competitiveness, achieving higher efficiency standards and the need for introducing electric vehicles.

Incentives to boost local manufacturing
• Export incentives
• State incentives
• Area based incentives
• Production Linked Incentive (PLI) scheme