The government has selected 20 companies — including Suzuki Motor Gujarat, Tata Motors, Hyundai, Mahindra & Mahindra, Ashok Leyland, Bajaj Auto, HeroMotoCorp and Ola Electric — to take advantage of the support meant for original equipment manufacturers (OEMs) under a `25,938-crore production-linked incentive (PLI) scheme for the automobile and auto component industries.
The heavy industries ministry said on Friday it received proposals with committed investments of `45,016 crore from these 20 applicants. The scheme is an important part of the Centre’s efforts to erase “cost disabilities”, create economies of scale and build a robust supply chain of advanced automotive technology products in India.
The PLI scheme has two parts — Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The ministry will separately announce the list of eligible beneficiaries from the auto component industry. It received 115 applications from both OEMs and component manufacturers.
Other successful OEM applicants are Eicher Motors, Ford India, Kia India, PCA Automobiles, Pinnacle Mobility Solutions, Piaggio Vehicles, TVS Motor, Axis Clean Mobility, Booma Innovative Transport Solutions, Elest, Hop Electric Manufacturing and Powerhaul Vehicle.
These include four manufacturers of bikes and three-wheelers and six new non-automotive investors.
Under the scheme, incentives will be granted for the sales of advanced automotive technology products (both vehicles and components) manufactured in India for five years from April 1, 2022.
The scheme aims to woo big firms through attractive incentives. So, the government has set lofty revenue and investment criteria for applicants to be eligible. It has capped incentives per auto group at an elevated level of `6,485 crore, or 25% of the total outlay. The proposed incentives for original equipment manufacturers range from 13% to 18% of determined (incremental) sales value, while those for component manufacturers vary from 8% to 13%.
To be eligible for the incentives, existing OEMs must have a minimum of `10,000 crore in global revenue and `3,000-crore investment in fixed assets.
New non-automotive investors wishing to tap the scheme must have a global net worth of `1,000 crore and a clear business plan for investment in advanced automotive technologies. These new OEMs will have to progressively raise their investment to at least `2,000 crore by March 2027.
The programme will be effective from FY23 (incentives will be disbursed from FY24 for five years) and the base year for computing sales value would be FY20. This scheme, along with an already-launched PLI programme for advanced chemistry cell (`18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles scheme (`10,000 crore) will “enable India to leapfrog from traditional fossil fuel-based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient electric vehicles-based system”, the heavy industries ministry said.
