Good Response to Production Linked Incentive Scheme Automobile and Auto Component Industry

by Jan 12, 2022Business & Infrastructure0 comments

A total of 115 companies have filed their application under the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component Industry in India which was notified on 23rd September 2021. The scheme was open for receiving applications till 23:59:59 hours IST on 9th January 2022. Incentives are applicable under the scheme for determined sales of Advanced Automotive Technology (AAT) products (vehicles and components) manufactured in India from 1st April 2022 onwards for a period of 5 consecutive years.

The Government has approved the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components Industry in India for Enhancing India’s Manufacturing Capabilities for Advanced Automotive Products with a budgetary outlay of ₹25,938 crore.

The scheme is designed to bolster the growth of the local manufacturing ecosystem for advanced automotive products in India, along with the aim of creating a global auto manufacturing hub and manufacturing champions in the country. The scheme is expected to bring investments into the country amounting to over USD 5.6 billion over its tenure while creating employment for over 750,000 individuals.

In November 2021, the detailed application procedure and guidelines for the PLI scheme were released. The scheme incentivizes Auto Original Equipment Manufacturers (OEMs) as well as Auto Component Manufacturers while also, providing an opportunity for new investors who are currently not a part of the automotive manufacturing space.

In other words, the PLI Scheme for Automobile and Auto components proposes financial incentives to boost domestic manufacturing of Advanced Automotive Technology products and attract investments in the automotive manufacturing value chain. Its prime objectives include overcoming cost disabilities, creating economies of scale and building a robust supply chain in areas of Advanced Automotive Technology products. It will also generate employment. This scheme will facilitate the Automobile Industry to move up the value chain into higher value-added products.

The PLI scheme for the auto sector will incentivize high value Advanced Automotive Technology vehicles and products. It will herald a new age in higher technology, more efficient and green automotive manufacturing. The PLI Scheme for the auto sector envisages to overcome the cost disabilities to the industry for manufacturing of Advanced Automotive Technology products in India. The incentive structure will encourage industry to make fresh investments in indigenous supply chain/ deep localization of AdvancedAutomotive Technology products.

Now that the PLI Scheme is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business., it has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery ElectricVehicles and Hydrogen Fuel Cell Vehicles of all segments.

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, etc.

This PLI Scheme for automotive sector (₹25,938 crore) along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) (₹18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles(FAME) (₹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.

The PLI scheme for Automobile and Auto Component Industry has been a huge success in terms of the applications received from local as well as globally headquartered groups engaged in/ proposing to manufacture Advanced Automotive Technology vehicles/ products.

It seems that the Industry has reposed its faith in India’s stellar progress as a world class manufacturing destination which resonates strongly with Hon’ble Prime Minister’s clarion call of AtmaNirbhar Bharat – a self-reliant India.

Would love your thoughts, please comment.x