Auto sector gets ₹26,058-crore PLI scheme to push new tech, clean fuels

Our Bureau New Delhi | Updated on September 15, 2021

5-year plan to fetch investments of ₹42,500 crore and incremental output of ₹2.3-lakh crore

The Union Cabinet today approved a PLI (Production Linked Incentive) scheme for the auto sector to promote advanced technologies, including clean energy, with incentives of ₹26,058 crore to be provided over five years.

The auto sector is expected to attract fresh investments of over ₹42,500 crore in the five years and incremental production of over ₹2.3-lakh crore with the introduction of the PLI scheme, a government statement said. It is likely to create additional employment for over 7.6 lakh people, it added.

Also approved was a PLI scheme for the drone industry, with an allocation of ₹120 crore spread over three financial years. It is expected to bring fresh investments of over ₹5,000 crore and incremental production of over ₹1,500 crore.

“The PLI scheme for the automotive sector along with the already launched PLI for Advanced Chemistry Cell (₹18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) Scheme (₹10,000 crore) will give a big boost to manufacture of electric vehicles,” the release said. While the government had initially announced an outlay of ₹57,043 crore for the auto sector PLI scheme, it has been trimmed to ₹26,058 crore .

The PLI Scheme is open to existing automotive companies as well as new ones currently not in the automobile or auto components manufacturing business.

Scheme components

The scheme has two components. The first, called the Champion OEM Incentive Scheme, is a ‘sales value linked’ plan, applicable to Battery Electric and Hydrogen Fuel Cell Vehicles of all segments.

The second, the Component Champion Incentive Scheme, is a ‘sales value linked’ plan for advanced technology components, Completely and Semi-Knocked Down (CKD/SKD) kits, vehicle aggregates of 2-wheelers, 3-wheelers, passenger vehicles, commercial vehicles and tractors.

“The revised focus of the PLI scheme on alternative fuels, electric vehicles and utilisation of advanced technological innovations, will help the industry move faster towards future technologies.... The pandemic has taught us the essence of Aatmanirbharta in every aspect possible. Hence, this is a significant push by the government for its workforce, organisations (OEMs), and consumers to seek competitive, diverse, and climate conscious mobility solutions and a progressive India,” said Venu Srinivasan, Chairman, TVS Motor Company.

Vipin Sondhi, MD & CEO, Ashok Leyland and Vice-President, SIAM, said: “The PLI scheme is all-inclusive. It provides incentives for incremental performance by the OEMs, as manufacturers move towards making India a strong hub for Electric Mobility while also looking at harnessing the potential of Hydrogen energy for automotive applications. It will also support other advanced automotive technologies.”

“PLI has the potential to substantially increase volumes and will provide a huge opportunity for exports to grow. This scheme is being announced at an opportune time for India as the auto industry realigns its supply chain globally. India can therefore capitalise on this changing scenario, to become an integral manufacturing base for the world,” he said.



Published on September 15, 2021

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