India's Automotive Component Export Growth Strategy
India aims to enhance its automotive components exports to $60 billion over the next five years, as per a report by NITI Aayog. This will elevate India's presence in global markets, achieving a trade surplus of nearly $25 billion and increasing its global auto components value chain share from 3% to 8%.
Employment Growth
This initiative is expected to create 2-2.5 million additional large-scale employment opportunities, bringing total employment in the sector to 3-4 million.
Strategic Policy Initiatives
To achieve these goals, strategic policy initiatives in high-value automotive manufacturing are necessary, including:
- Production Support Scheme
- Operating expenditure support for scaling manufacturing of specific components.
- Capital expenditure support for manufacturing tools and dies.
- Non-fiscal Interventions
- Business improvement support for global competitiveness.
- Encouragement of joint ventures and free trade agreements.
- Adoption of Industry 4.0 and enhanced quality standards.
- Skilling Initiatives
- Development of auto components and incentives for skilled foreign nationals.
Incentives and R&D Ecosystem
The report suggests incentives like streamlined visa processes and long-term employment opportunities, similar to China’s Thousand Talents Program. Building a strong R&D ecosystem with strategic support schemes and financial incentives across product categories is emphasized.
Government Schemes and Economic Considerations
NITI Aayog highlights the need to reflect on the returns from existing schemes like FAME and PM E-DRIVE. Ensuring consumption support within fiscal constraints is crucial, and innovation through competition is vital for sustaining localisation benefits.
- Enhancement of joint ventures and free trade agreements.
- Providing adequate incentives to attract skilled foreign nationals and retain skilled Indians.
- Prioritising a vibrant research and development ecosystem.
- Providing fiscal support in the automotive ecosystem through various schemes.
