Govt. approves PLI Scheme for auto, auto-components and drone industries

Union Cabinet has approved a Rs. 26058 crore production linked incentive (PLI) scheme on September 15, 2021, for auto, auto-components and drone industries in order to enhance India’s manufacturing capabilities.

Highlights

  • PLI scheme will help in incentivising the emergence of global supply chain of advanced automotive technologies in India.
  • Incentives of Rs. 26,058 crores will be provided to industry in the period of five years.
  • It is expected that in the period of five years, the PLI scheme for the automobile and auto components industry will result into the fresh investment of over Rs. 42500 crores as well as incremental production of about Rs 2.3 lakh crore.
  • PLI scheme will also create additional employment opportunities of more than 7.5 lakh jobs.
  • The scheme for auto sector is open to existing automotive companies and new investors that are currently not available in automobile or auto component manufacturing business.

Background

PLI scheme for automobile and drone industries is a part of overall announcement of PLI schemes that was announced for 13 sectors during the Union Budget 2021-22. It was announced with an outlay of Rs. 1.97 lakh crore.

Significance of the scheme

  • This scheme for the auto sector will help in overcoming the cost disabilities related to industry, for manufacturing the advanced automotive technology products in India.
  • Incentive structure will also encourage industry in making fresh investments for the indigenous global supply chain of Advanced Automotive Technology products.

Components of the scheme

The scheme comprises of two components- Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

  1. Champion OEM Incentive scheme: It is a ‘sales value linked’ scheme. It is applicable on Battery Electric Vehicles as well as Hydrogen Fuel Cell Vehicles of all segments.
  2. Component Champion Incentive scheme: It is a ‘sales value linked’ scheme which is applicable on Advanced Automotive Technology components of vehicles, vehicle aggregates of 2-Wheelers, 3-Wheelers, commercial vehicles, passenger vehicles, and tractors.

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