India plans an incentive scheme for the auto sector with the view of increasing the exports of vehicles and components for the next five years, sources said.
The feedback for this scheme has been asked to the auto industry by the Department of Heavy Industries (DHI) to increase the local production and procurement for export. The companies should meet certain criteria to be eligible for the scheme. The auto company should have its presence in at least 10 countries, have revenue of at least 100 billion rupees, and operating profit of at least 10 billion rupees in three of the last five years, sources said.
BIG PUSH FOR THE AUTO SECTOR
It is said that the government has identified five sectors to boost exports, including autos and textiles. The government has spoken to various stakeholders to boost the auto sector. A government official said that the government is trying to figure out ways in a global context and even though the plan has not been finalized, there will be a big push from the government side to boost the sector.
Vinay Piparsania, the consulting director at Counterpoint Research stated that the scheme can succeed only if the government ensures that the scheme is not complicated by too many conditions and is not based on sales targets.
One proposal by the government is to have a production-linked incentive under which companies will get benefits proportionate to the distance between the factory and point of sale to compensate the high warehouse and logistic cost that the company incur. Another proposal is to give incentives to increase the production of specific car models but only if 80 % of them are exported, sources said.
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