BUSINESS

‘PLI scheme to benefit auto industry over 2020-25 period’

Fitch Solutions Country Risk and Industry Research on Friday said the government’s decision to extend the production-linked incentive scheme to the automobile industry would provide significant benefits to the sector over the next 5 years.

It, however, noted that some of the operational risks present in the country would still remain a challenge for many investors despite the incentive. “We believe this policy provides significant upside potential for India’s autos manufacturing industry over 2020-2025, especially in the field of electric vehicles (EVs) and the associated supply chains,” Fitch Solutions Country Risk and Industry Research said in a statement.

Citing the Federation of Automobile Dealers Associations, it noted that the domestic automotive industry is set to receive a large portion of this incentive fund over the five-year period around Rs. 57,000 crore.

‘Adds to costs’

“However, we note that the elevated operational risks present in the country will remain a challenge for many investors,” it said.

“Our operational risk team believes that businesses operating in the country will continue to face additional structural risks stemming from legal risks, security gaps, excessive bureaucracy and patchy utility infrastructure, all of which currently increase the costs of operating in India, particularly compared with China,” it added.