The government has cleared Rs 25,938 crore worth new production-linked incentive (PLI) scheme for the auto sector. This is done primarily to boost the production of electric vehicles and hydrogen fuel cell vehicles. In addition, the government has also announced Rs 120 crore for the drone industry. As per the government estimates, the PLI scheme will generate 7.5 lakh jobs for the auto sector. Last year, the government had announced the scheme worth Rs 57,043 crore for a period of five years for the automobile and auto components sector. That said, the benefits for the auto sector are scaled down by more than half compared to the last year’s announcement as the focus shifts to producing electric and hydrogen fuel vehicles in sync with other incentive schemes.
Now coming to who all would be eligible for the new PLI scheme, these include auto companies that invest Rs 2,000 crore for four-wheelers and Rs 1,000 crore for two-wheelers over five years. Moreover, companies that invest over Rs 80 crore in the drone industry will be eligible for the benefits. Now, going into the details, the segments of auto components covered under the PLI scheme include electronic power steering system, automatic transmission assembly, sensors, supercapacitors, adaptive front lighting, sunroofs, tyre pressure monitoring system, tyre pressure monitoring system, automatic braking, and collision warning system.
The PLI scheme excludes conventional petrol, diesel and CNG segments, according to a top official. Heavy Industry Secretary Arun Goel stated that there is no need to give benefits to the ICE (internal combustion engine) segment as it has sufficient capacity in India. The PLI scheme is incentivizing only advanced automotive technologies or auto components whose supply chains are weak, dormant, or non-existing. The new PLI scheme is open to existing automotive companies and also, new investors who are currently not in the automobile or auto component manufacturing business.
How the Indian Auto Industry reacted to the new PLI scheme announcement:
Kenichi Ayukawa, SIAM President said, “SIAM is grateful to the Hon’ble Prime Minister, Hon’ble Minister of Heavy Industries, Secretary Heavy Industries, and all other policy makers in the Government involved in launching the PLI Scheme for the auto industry. The scheme will contribute towards reducing carbon emissions and oil imports with local manufacturing. SIAM will be happy to engage with the Ministry of Heavy Industries for detailing and fine-tuning, execution and further strengthening the scheme.”
Commenting on the announcement of the new PLI scheme, Girish Wagh, Executive Director, Tata Motors said, “We at Tata Motors are much encouraged with the new Production-Linked Incentive (PLI) scheme announced for the auto sector. This scheme is both progressive and transformational. It reiterates India’s holistic commitment to a sustainable future and accelerates the country’s progress towards green mobility. Several meaningful incentives have been offered across the entire value chain engaged in manufacturing of battery powered electric vehicles and hydrogen fuel cell, as well as their supporting infrastructure and exports.”
“Encouraging production of auto components using advanced technologies will boost localisation, domestic manufacturing and also attract foreign investments. This will help component manufacturers strive for scale, which will require setting up of new facilities and create more jobs. With auto being a strategically important sector of the economy, the benefits accrued overall will result in a multiplier effect. This announcement is a significant milestone in India’s journey towards ‘Atmanirbharta’ and will enable the country to join the top echelons of auto manufacturing nations.”
Dr Anish Shah, MD & CEO, Mahindra & Mahindra Limited said, “The Government’s PLI scheme for auto will drive faster acceptance of sustainable mobility solutions. India promises to be one of the largest EV markets in the world. This scheme is a giant step in the right direction.”
Rajesh Jejurikar, Executive Director, Auto & Farm Sectors, Mahindra and Mahindra Limited said, “The auto PLI scheme is a transformational move that has potential to create a multiplier effect for both clean mobility and also for the economy. It gives Indian firms powerful impetus to be globally competitive in EVs and technology.”
Chetan Maini, Co-Founder and Chairman, SUN Mobility stated, “We thank the Government of India for quickly ratifying and implementing the Production Linked Incentive (PLI) scheme for the automobile industry. The outlay of Rs 26,058 crore over the next five years under the PLI scheme will reinvent R&D and manufacturing making it more innovative while at the same time increasing opportunities for greater employment. We are delighted that the PLI scheme is technology agnostic which gives consumer access and choice to every green technology.”
“The FAME policy is already accelerating the adoption of EVs and now the PLI schemes for both Advanced Chemistry Cells (ACC) and manufacturing will see India quickly becoming a global hub for development and manufacturing of EV related technologies. SUN Mobility has been investing consistently towards making affordable EV technology in India and this new scheme will further accelerate us towards our goal of having 1 million EVs use our platform by 2025.”
Yatin Gupte, Chairman & Managing Director at Wardwizard Innovations & Mobility Ltd. said, “The Production Linked Incentive scheme (PLI) of Rs. 26,058 crore for the Auto and drone industry is a futuristic step by the government, which will help the automobile industry to be self-reliant, loaded with the latest technology. The scheme aims to enhance India’s manufacturing capabilities and will boost the sunrise industry of Electric Vehicles. The PLI scheme is going to promote our Indian manufacturers to expand their businesses. The push for a clean environment and sustainable mobility will help us to raise our targets by a higher percentage and expand operations in global markets. This move will further make this segment stronger with the utilization of advanced technology and fasten infrastructure.”
Mr. Harsha Kadam, Managing Director & CEO, Schaeffler India Limited added, “The Government of India has taken a holistic approach to promote the development of advanced mobility technologies locally and future-proof India’s capabilities and self-sufficiency. With a special focus on localisation of advanced technologies in auto components, India is poised to be an energetic player in the global ecosystem of sustainable mobility. The PLI scheme will enable a smooth, yet accelerated transition to sustainable and environmentally friendly mobility solutions, bringing overall progress to business and society.”
Further commenting on the PLI scheme’s announcement, Mr. Siddharth Chaturvedi, Founder & Managing Director, Boys and Machines India added, “The Union Cabinet approval of the production linked incentive scheme for auto and auto components is heartening and encouraging. It is a transformative move. In the first place, it recognizes the Indian automotive industry as an efficient engine that will power the country’s economic growth heading into the future. Secondly, with the Component Champion Incentive Scheme for CKD and SKD kits for passenger vehicles, we anticipate that more luxury car OEMs will manufacture indigenously. With this, luxury cars will become more accessible and we can expect a rise in the luxury car market share in the coming years, eventually leading to growth for the pre-owned luxury car segment. We welcome this move by the Government of India.”