Govt announces Rs25,938-cr PLI scheme for auto industry
16 September 2021
The central government has approved a production-linked incentive (PLI) scheme for automobile industry with a budgetary outlay of Rs25,938 crore. The PLI scheme, which will incentivise high value advanced automotive technology vehicles and products, is expected to herald a new age in higher technology, more efficient and green automotive manufacturing.
PLI Scheme for the automobile industry is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs1,97,000 crore. With the announcement of PLI schemes for 13 sectors, minimum additional production in India is expected to be around Rs37,50,000 crore over 5 years with minimum expected additional employment of nearly 10 million over 5 years.
The PLI scheme for the auto sector is aimed at overcoming the cost disabilities to the industry for manufacture of advanced automotive technology products in India. The incentive structure will encourage industry to make fresh investments for indigenous global supply chain of advanced automotive technology products.
It is estimated that over a period of five years, the PLI scheme for automobile and auto components industry will lead to fresh investment of over Rs42,500 crore, incremental production of over Rs2,30,000 crore and generate additional opportunities of over 7.5 lakh jobs. Further, this will increase India’s share in global automotive trade.
The PLI scheme for auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business. The scheme 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 for Battery Electric Vehicles 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 along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) (Rs18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (Rs10,000 crore) is expected to help India leapfrog from traditional fossil fuel based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient electric vehicles (EV) based system.