A total of 95 companies including the likes of Maruti Suzuki, Hero MotoCorp, Ashok Leyland, Bajaj Auto, and Bosch have committed to invest Rs 74,850 crore to manufacture automobiles and components under Narendra Modi government’s PLI (Production Linked Incentives) scheme. The investments proposed over a period of five years is 75% more than the government’s target estimate, the Ministry of Heavy Industries said Tuesday. Under the scheme, the approved companies will receive financial incentives upto 18% from the government when they manufacture in India.
In total, the government had targeted an investment estimate of Rs 42,500 crore for both auto and auto component makers under the PLI scheme – the Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The government said it has approved a proposed investment of Rs 29,834 crore from applicants under the Component Champion Incentive Scheme, higher than its target of Rs 25,938 crore.
Upto 18% financial incentives for auto, auto component makers
The proposed incentives for component manufacturers range from 8% to 13% of determined sales value, while those for OEMs vary from 13% to 18%. Incentives will be granted for sales of advanced automotive technology products (both vehicles and components) manufactured in India for five years from April 1, 2022. In the budget, the government has set aside an outlay of Rs 25,938 crore for auto and auto component makers under this scheme.
“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,” Union Heavy Industries Minister Dr. Mahendra Nath Pandey said in the statement. EV makers including Ola Electric, and Hop Electric have also been approved under the scheme.
PLI Autos: Domestic as well as foreign businesses approved such as Maruti, Bosch
Auto makers and auto component makers such as Maruti Suzuki, Bharat Forge
Earlier in February, the government had announced the list of 20 OEMs, which have been selected under the Champion OEM Incentive Scheme. Approved companies included the likes of Suzuki Motor Gujarat, Tata Motors, Hyundai, Mahindra & Mahindra, HeroMotoCorp and Ola Electric.
Make in India: to create more jobs, effective supply chain
The scheme is a part of the government’s efforts to erase “cost disabilities”, create economies of scale for advanced automotive technology products in India. It will be effective from fiscal 2023, while the incentives will be disbursed from fiscal 2024 for five years. The PLI scheme, under which 13 sectors have been approved by the central government, aims to create a robust supply chain for manufacturing. Apart from Indian businesses, approved applicants include groups from countries such as Japan, Germany, US, UK, Korea, and France.
PLI was announced following the COVID-19 pandemic in order to make India self-reliant and generate employment. The scheme has also found mention in the World Bank’s Global Economic Prospects report according to which India’s growth could be boosted with the help of this scheme. The PLI scheme is expected to add about 1.7% to India’s GDP according to a report from BNP Paribas.