Rs 26,000 cr PLI scheme for auto sector: Key pts

1 week ago 10

NEW DELHI: The government of Wednesday announced Rs 26,058 crore for PLI (production-linked incentive) schemes for the auto, auto component industry and drone industry to enhance manufacturing in India.
How much is allocated:
A sum of Rs 25,929 crore has been earmarked for the auto sector and Rs 120 crore for the drone Industry. The PLI scheme will incentivize the emergence of advanced automotive technologies' global supply chain in India.
Outcome predicted:
It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to a fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs, Union minister Anurag Thakur said.
Why PLI is introduced:
The scheme for the auto sector envisages overcoming the cost disabilities to the industry for the manufacture of advanced automotive technology products in India.
The incentive structure will encourage the industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products, Thakur said.
The scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in the automobile or auto component manufacturing business.
Sub-parts of the PLI:
The scheme has two components - Champion OEM Incentive Scheme and Component Champion Incentive Scheme.
The Champion OEM Incentive scheme is a ‘sales value linked' scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments, the minister said.
The Component Champion Incentive scheme is a ‘sales value linked' scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors.
Complimenting schemes in place:
This PLI scheme for the automotive sector along with the already launched PLI scheme for Advanced Chemistry Cell (Rs 18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (Rs 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 (EV) based system.
Further, the PLI scheme for the drones and drone components industry addresses the strategic, tactical and operational uses of this revolutionary technology.
A product-specific PLI scheme for drones with clear revenue targets and a focus on domestic value addition is key to building capacity and making these key drivers of India's growth strategy.
The scheme will over a period of three years, lead to investments worth Rs 5,000 crore, an increase in eligible sales of Rs 1,500 crore and create additional employment of about 10,000 jobs.
Industry reaction:
Sunjay Kapur, President ACMA: The PLI scheme envisions creation of an ‘Atmanirbhar’ (self-reliant), globally competitive and future-ready Indian automotive sector. Thrust on incentivizing new-age technologies will facilitate creation of a state-of-the-art automotive value chain in the country and give a much-needed impetus to manufacturing of cutting-edge automotive products in India. Further, with global economies de-risking their supply chains, the PLI will aid India in developing into an attractive alternative source of high-end auto components
Girish Wagh, Executive Director, Tata Motors: 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.
Saurabh Agarwal, Tax Partner, Automotive sector, EY India: While the scheme is incentivizing the manufacturing in the vehicle and component space, the industry awaits similar policy measures to promote the manufacturing of goods required for setting up the infrastructure required for charging such vehicles.
The beneficiaries in the PLI scheme for auto sector are likely to be 10 vehicle manufacturers, 50 auto-component manufactures and 5 new non-automotive investors planning to enter into the automotive sector.

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