The Union Cabinet approved Rs 26,058 crore of production-linked incentives to encourage domestic production of automobiles, drones and their components.
The benefits for the auto sector were scaled down by more than half from levels announced last year as the focus shifts to producing electric and hydrogen fuel vehicles in conjunction with other incentive schemes.
Of the total amount, Rs 25,938 crore has been set aside for the manufacture of electric and hydrogen fuel vehicles and components, while Rs 120 crore will be offered to encourage production of drones and their parts, the government said at a briefing on September 15.
“Only companies that fulfil the investment and revenue criteria will get the benefits,” Minister of Information and Broadcasting Anurag Thakur said.
Automobile companies that invest Rs 2,000 crore for four-wheelers and Rs 1,000 crore for two-wheelers over five years will be eligible for the PLI scheme, the minister said. Companies that invest more than Rs 80 crore in the drone industry will qualify for the benefits.
Auto sector PLI
The Cabinet reduced the PLI for the auto and auto components sector to Rs 25,938 crore from an outlay of Rs 57,043 crore announced last year as the focus shifts to hydrogen fuel vehicles and electric vehicles
“We are leapfrogging (technology) to environmentally cleaner vehicles. The new PLI scheme will work hand-in-hand with the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) Phase II scheme and PLI scheme for advanced cells and therefore meet all the requirements of the electric vehicle ecosystem in India,” Thakur said, explaining why the PLI scheme for the sector was scaled down.
The government has already launched a PLI scheme for Advanced Chemistry Cells (Rs 18,100 crore) and FAME (Rs 10,000 crore).
The PLI Scheme is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business.
Automobile original equipment manufacturers must have a minimum revenue of Rs 10,000 crore and invest Rs 2,000 crore over five years to get the benefits of the scheme. Two-wheeler companies must invest Rs 1,000 crore. Auto component makers should have a minimum revenue of Rs 500 crore and Rs 150 crore of fixed asset investment to be eligible.
Non-automotive investors must have a global net worth of Rs 1,000 crore and a clear business plan for investment in advanced automotive technologies to be eligible for the scheme.
The benefits are expected to attract new investments of more than Rs 42,500 crore in five years and incremental production of over Rs 2.3 lakh crore. The scheme is expected to generate as many as 750,000 jobs in the auto sector, the government estimates.
A total of 22 components have been covered by the PLI scheme, including flex fuel kits, hydrogen fuel cells, hybrid energy storage systems and electric vehicle parts such as charging ports, drive trains, electric vacuum pumps and electric compressors. Sunroofs and electronic stability controls have also been added.
The scheme may also incentivise EV parts such as high-voltage connectors and cables and AC and DC charging inlet and outlet ports.
Incentives for drones
The PLI scheme for drones comes just weeks after liberalised rules for the fast-expanding sector were announced by the government in August.
The Centre is aiming for the domestic drone sector to fulfil a number of civilian, commercial and military needs, including surveillance, delivery of medicines, food and goods, and requirements in sectors like the railways, roadways and agriculture.
The scheme for drones is expected to bring in fresh investments of over Rs 5,000 crore in three years and incremental production of Rs 1,500 crore. It’s also estimated that about 10,000 additional jobs will be created.
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