PLI scheme for auto sector to build self-sustaining framework for e-mobility industry: SMEV

The Union Cabinet on Wednesday approved a Rs 26,058 crore PLI scheme for auto, auto-components and drone industries to enhance India's manufacturing capabilities

Electric vehicle manufacturers’ body SMEV on Thursday said the production-linked incentive (PLI) scheme for auto and auto-components will build a self-sustaining framework for the e-mobility industry.

The Union Cabinet has on Wednesday approved a Rs 26,058 crore PLI scheme for auto, auto-components and drone industries to enhance India's manufacturing capabilities.

The scheme will incentivise the emergence of advanced automotive technologies' global supply chain in India, with incentives worth around Rs 26,000 crore to be provided to the industry over the next five years.

Read | PLI scheme for auto sector to help India be a world-class manufacturing base, say experts, industry

“The scheme is especially beneficial for existing large players engaged in the automotive business and new entrants, as it will renew the interest of traditional players and motivate them to invest in the sector,” Society of Manufacturers of Electric Vehicles (SMEV) Director-General Sohinder Gill said in a statement.

It is estimated that over the five years, the PLI scheme for the automobile and auto components 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 move (Scheme) will strengthen the manufacturing ecosystem and build a self-sustaining framework for the e-mobility industry,” Gill noted. However, Gill said, most of the existing small and medium OEMs engaged in the EV automotive business and new startups may not be able to qualify for the scheme and will have to operate under the existing norms.

Policies supported by fiscal and non-fiscal incentives are the pillars that drive consumer sentiment and accelerate the adoption of new products in the market, he said.

The scheme for the automotive sector along with the already launched PLI plans for Advanced Chemistry Cell (Rs 18,100 crore) and Faster Adoption 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.

“The Advanced Chemistry Cell (ACC) and amendments to FAME II scheme in June have generated a positive consumer response; the same is envisioned on the rolling out of the PLI scheme. We look forward to continuing working with industry players and policymakers to build India as a global EV manufacturing hub,” Gill said in the statement.

The scheme for automobile and drone industries is part of the overall announcement of PLI plans 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 is open to existing automotive companies and new investors, who are currently not in the automobile or auto component manufacturing business.

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