The government on Tuesday selected 75 companies under the production-linked incentive (PLI) scheme for automobile and component industry including Maruti Suzuki India, Hero MotoCorp, Bharat Forge, Bosch Automotive, Asahi India, Cummins Technologies, Delphi-TVS Technologies, Toyota Kirloskar Auto Parts and Wabco India.

The PLI scheme for automobile and auto component industry, for five years, commencing fiscal year 2022-23 has an outlay of ₹25,938 crore.

The scheme has been successful in attracting proposed investment of ₹74,850 crore against the target estimate of investment ₹42,500 crore over a period of five years. The proposed investment of ₹45,016 crore is from approved applicants under Champion original equipment manufacturers (OEM) incentive scheme and ₹29,834 crore from approved applicants under Component Champion Incentive Scheme.

Now, this PLI scheme for automotive sector ₹25,938 crore, along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) (₹18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (₹10,000 crore) will enable India to leapfrog from traditional fossil fuel-based automobile transportation system to efficient electric vehicles-based system.

A total of 115 companies had filed their application under the PLI scheme for automobile and auto component industry in India, which was notified on September 23, 2021. Out of which, five auto OEM companies had applied for both the parts of the scheme. The scheme was open for receiving applications till January 9.

The incentives are applicable under the scheme for determined sales of advanced automotive technology products (vehicles and components) manufactured in India from April 1, 2022 onwards for five consecutive years, the Ministry of Heavy Industries said in the statement.

“The overwhelming response shows that industry has reposed its faith in India’s stellar progress as a world-class manufacturing destination...India will surely take a huge leap towards cleaner, sustainable, advanced and more efficient electric vehicles-based system,” Mahendra Nath Pandey, Minister of Heavy Industries, said.

Incentives to domestic manufacturing

The PLI scheme for automobile and auto component industry proposes financial incentives to boost domestic manufacturing of AAT products and attract investments in the automotive manufacturing value chain. Its prime objectives include overcoming cost disabilities, creating economies of scale and building a robust supply chain in areas of AAT products.

It will also generate employment. This scheme will facilitate the automobile industry to move up the value chain into higher value-added products, the Ministry said.

The scheme has two components – Champion OEM incentive scheme and Component Champion incentive scheme. Total 95 applicants have been approved under this PLI scheme. The Ministry had earlier approved 20 applicants (along with their 12 subsidiaries) for Champion OEM incentive scheme.

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Subsequently, it has processed the applications received under Component Champion incentive scheme and 75 applicants (along with their 56 subsidiaries) have been approved under this category of the scheme.

ACMA welcomes the scheme

Commenting on the announcement, Automotive Component Manufacturers Association of India (ACMA) said the PLI scheme will not just help the component manufacturers become globally competitive but will also provide a much-needed momentum to the ‘Make in India’ initiative.

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“Today’s announcement has indeed enthused the entire auto components industry and will be a catalyst in our transformational journey from a conventional industry to a mobility industry. That apart, a slew of policy measures announced in the recent past including the extension of FAME-2 scheme, the PLI on ACC battery, the policy initiative on battery swapping and energy as service, among others, will create a new paradigm of technological excellence in the automotive supply chain in India to make it globally competitive,” Sunjay J Kapur, President ACMA and Chairman Sona Comstar said.