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MOSL: Morning India (21/September/21): 1. Automobiles (PLI for Auto sector focuses on ‘Atmanirbhar Bharat’); 2. Consumer; 3. Petronet LNG; 4. Hotels

MOrning India (21/September/21): 1. Automobiles (PLI for Auto sector focuses on ‘Atmanirbhar Bharat’); 2. Consumer; 3. Petronet LNG; 4. Hotels

 

Today’s top research idea

Automobiles: PLI for Auto sector focuses on ‘Atmanirbhar Bharat’; potential to influence competitive landscape

• It is expected that 15 OEMs (includes five new OEMs) and 50 component manufacturers could be shortlisted after meeting the eligibility criteria for the scheme. The scheme is currently restricted to EVs and hydrogen fuel cells (not available for hybrid vehicles). Also, the policy currently does not cater to charging infrastructure components.
• The eligibility criteria may work against smaller OEMs and older start-ups: Considering that the base year of the policy is FY20, many older start-ups may not qualify for this scheme. This could potentially change the competitive landscape as incentives are 13-16% of sales.
• The subsidy would be divided into various sub-segments (but these details would not be shared by the government). There could be a cap on incentives at the company level.
• Of the INR259.4b allocated to the PLI scheme, OEMs could be allocated around 70-75% of the total outlay (i.e., INR180-190b) and the balance could be allocated to auto component manufacturers.
• In the event that both auto component suppliers and auto OEMs are availing incentives under the PLI scheme, OEMs would be able to claim incentives only on value add and there would be no double benefit.

Piping hot news

Nestle India chief says 2022 going to be difficult year on higher commodity prices

Nestle India NSE chief Suresh Narayanan on Monday said that 2022 will likely be a "difficult year" as commodity prices are expected to rise and result in the spectre of food inflation for the manufacturers. In the last six to eight months, Narayanan said Nestle has seen an average price hike of 1-3 per cent. According to him, the first half of 2021 was relatively more secured and subdued in terms of commodity pricing as except packing materials and crude oil, by and large, prices of milk and wheat have been broadly stable. "Going forward, 2022 clearly looks to be promising to be a difficult year.