Several automakers in India are exploring ways to boost their exports to help them qualify for subsidies as part of a government program to promote local manufacturing, said three people with direct knowledge of the developments.
Excited by the prospects for export growth and use of excess capacity, executives from companies such as Tata Motors Ltd, Mahindra and Mahindra Ltd, Renault India Pvt. Ltd, Nissan Motor India Ltd and Skoda Auto Volkswagen India Pvt. Ltd has started looking for opportunities in Europe, America and Africa, the people named above said, asking not to be named.
On November 11, the government announced a production-linked incentive program (PLI) of approximately ₹$ 2 trillion to encourage companies in 10 industries to boost manufacturing in India. The automotive sector comprising car manufacturers and their parts suppliers will benefit from subsidies worth ₹57,000 crore – the biggest part of the program.
The government has pushed for cuts in component imports, especially from China, and increased exports of vehicles and parts from India. Prime Minister Narendra Modi also launched the Atmanirbhar campaign to promote local manufacturing and exports.
Most automakers have started looking for opportunities to maximize exports, which will allow them to qualify for the PLI program, one of the people named above said.
“Some are also working with consulting companies on how and where exports can be increased from India. Although the parameters are not known, senior officials in charge have told automakers that export-related income will be taken into consideration when choosing beneficiaries, ”the person said.
A spokesperson for Nissan Motor India said the company will continue to focus on exports and make India its main export hub and take advantage of the competitiveness of its plant outside Chennai to support markets in the region.
“The Nissan Magnite is the first B-SUV manufactured for India under our ‘Make in India, do for the world’ philosophy, and we are exploring export opportunities,” the spokesperson said.
A spokesperson for Tata Motors said that the PLI program will promote “the potential and ambition” of the Indian automotive sector.
“At Tata Motors, we provide mobility solutions across geographies and have more than 8.5 million Tata brand vehicles in circulation in 175 countries. We will continue to seek new markets, ”the spokesperson said in an email response to questions.
Questions emailed to spokespersons for M&M, Skoda Auto Volkswagen and Renault India went unanswered.
The second person cited above said that the PLI program will indirectly promote exports and automakers will be able to better utilize idle capacity and offset the slowdown in sales in the local market.
“Most manufacturers don’t want to depend on the Indian market for their survival, and companies like Ford, Nissan and Volkswagen are big Indian exporters. In addition, most have excess capacity and local demand will not return to 2018 levels for another two years. Therefore, some upcoming products from Nissan, Renault Volkswagen and others could be exported to qualify for SOPs, ”the person said.
Amid the excitement, some industry executives are also cautious as the finer details of the program are still not public.
“The program was designed to indirectly support companies that export, but we still don’t know what the threshold will be and how strict it will be. Having said that, most companies are looking to increase their exports in the coming years to qualify for the incentives, ”the person said.