Fitch Solutions Country Risk and Industry Research said on Friday that the government’s decision to expand the production-linked incentive (PLI) scheme for the automobile industry would provide significant benefits to the sector over the next five years.
However, it has been noted that some of the operational risks present in the country will still remain a challenge for many investors despite the incentives.
Fitch Solutions Country Risk and Industry Research said in a statement, “We believe that this policy is a significant reversal for India’s auto manufacturing industry, particularly for electric vehicles (EVs) and related supply chains during 2020-2025.” Provides ability. “
Citing the Federation of Automobile Dealers’ Associations (FADA), it noted that the domestic automotive industry is set to receive a substantial chunk of this incentive fund of about Rs 570 billion over a period of five years.
“However, we should note that the high operational risk present in the country will remain a challenge for many investors. Our operational risk team believes that businesses operating in the country will face legal risks, security gaps, excessive bureaucratic and additional structural risks stemming from patch utility infrastructure, which currently increases operating costs in India Do, especially compared with China, Fitch Solutions Country Risk and Industry Research said.
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This means that while these incentives have the potential to provide a significant boost to the country’s automotive industry, the country will continue to decline to reduce its full capacity, given the limited progress in tackling structural challenges.
On 11 November, the Cabinet approved PLI for 10 more sectors, including auto and pharmaceuticals, with an outlay of approximately Rs 1,45,980 crore over a period of five years.
Under another PLI scheme, an outlay of Rs 51,311 crore has already been approved.
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