Govt approves revised Rs 25,938 cr PLI scheme for automotive industries
The Union Cabinet on Wednesday approved a revised Rs 25,938 crore production linked incentive (PLI) scheme for auto and auto-components industries to enhance the domestic manufacturing capabilities.
Last year, the government had announced a scheme for the automobile and auto components sector with an outlay of Rs 57,043 crore, earmarked for five years.
Briefing the media about the decision, Union Minister Anurag Thakur said that the scheme for the automobile 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.
The government also approved a Rs 120 crore PLI scheme for the drone industry.
''The government has approved the PLI scheme for automobile industry and drone industry with a budgetary outlay of Rs 26,058 crore,'' Thakur said.
The PLI scheme will incentivize the emergence of advanced automotive technologies' global supply chain in India. Incentives worth Rs 26,058 crore will be provided to industry over five years.
''...What the Indian auto sector already has and what it needs to add. So, the government after stakeholder consultation with all the industry, identified the additions required and...for that the cost disability, pointed out by the industry has been fully met with the incentive (which) is going to be paid to the extent up to 18 per cent...and for that the fund requirement is this (Rs 25,938 crore) what was approved today..So no cut has been approved on the fund requirement for this,'' he said.
''To reduce the import of components, the scheme will help...Those automotive companies which would fulfil the conditions of revenue and investment,'' he added.
Explaining further, he said selected champion auto companies have to put in a new investment of minimum Rs 2,000 crore in five years and for 2-3 wheeler firms, the target is Rs 1,000 crore.
Similarly in the component segment, selected firms would have to invest Rs 250 crore in five years and Rs 500 crore for new investors, he said.
Year-on-year growth of minimum 10 per cent in determined sales value has to be achieved to receive the incentive. For new non-automotive investors (who are currently not in automobile or component manufacturing business) eligible sales value in the base years will be taken as zero.
Further, according to the heavy industries ministry, new investment should be made from the same legal entity as the one applying for the incentive and cumulative new domestic investment made starting April 1, 2021 shall be considered under the condition.
The applicant company is required to meet the cumulative investment condition each year. Preference would be given to eligible companies committing to front load their investment during the scheme period.
In the event, any firm that meets the investment condition a few years before the end of the scheme, it will be eligible for incentives throughout the tenure of the scheme subject to meeting other conditions.
In case the company fails to meet the cumulative domestic investment condition in any given year, it will not receive any incentive for that year even if the threshold for determined sale value is achieved.
For the component segment, the ministry said on the annual basis, eligible component champions will have to separately report break up of sales value of components specific to battery-EV and hydrogen fuel cell vehicle components produced in India.
It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to 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, Thakur said.
The PLI scheme for automobile and drone industries is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore.
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 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.
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.
This PLI scheme for 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 1500 crore and create additional employment of about 10,000 jobs.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)