The Union Cabinet led by Prime Minister Narendra Modi on Wednesday cleared a Rs 26,058 crore production linked incentive (PLI) scheme for auto, auto-components, and drone industries to draw global investments in manufacturing in the two growing sectors.
Under the PLI scheme, the sectors will be incentivized with Rs 26,058 crore over a period of five years. While announcing the cabinet decision Union I&B minister, Anurag Thakur said that it is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to the 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.
According to the PLI scheme announced on Wednesday, existing auto sector players will have to make new investments of Rs 1,000 crore over the next five years to benefit from the scheme. New players will have to invest over Rs 2,000 crore. Also, new players in the auto component sector will have to invest Rs 500 crore while existing players will have to invest Rs 250 crores to reap the scheme benefits.
Further, the PLI scheme for the drones and drone components industry looks to promote the strategic, tactical and operational use of this 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,” Thakur said.
The scheme, over a period of three years, is expected to bring in investments worth Rs 5,000 crore and increase sales to Rs 1,500 crore while creating employment for 10,000 people. The government has offered incentives worth Rs 120 crore for the drone sector.
The announcement for the automobile and drone 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 Rs 1.97 lakh crore.
“The incentive structure under the Centre’s PLI scheme is likely to encourage 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.
According to Thakur, the scheme has two components – Champion OEM Incentive Scheme and Component Champion Incentive Scheme. While 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 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.
Also, the new incentives under the PLI scheme also look to fast track the auto sector transition from traditional fossil fuel-based automobile transportation systems to environmentally cleaner, sustainable, advanced, and more efficient Electric Vehicles (EV) based systems.
The PLI scheme for the auto sector will supplement 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).