Union Cabinet approves PLI Scheme of Rs. 26,058 crores for auto sector and drone industry- Check details

The approved Production Linked Incentive (PLI) Scheme has a budgetary provision of Rs. 26,058 crores- Rs. 25,938 crores for the auto sector and Rs. 120 crores for the drone industry.

Created On: Sep 15, 2021 16:27 IST
PLI Scheme for auto sector
PLI Scheme for auto sector

The Union Cabinet on September 15, 2021, gave its approval to Rs. 26,058 crore production Linked Incentive (PLI) Scheme for the auto, auto-components, and drone industry.

The approved PLI Scheme has a budgetary provision of Rs. 26,058 crores- Rs. 25,938 crores for the auto sector and Rs. 120 crores for the drone industry.

The Union Minister Anurag Thakur while informing about the scheme said that the automobile industry contributes to 35% of the manufacturing GDP of India. On the global automotive trade, India’s participation needs to be increased.

The Production Linked Incentive Scheme for the auto sector has been modified to focus on advanced automotive technologies. The makers of the diesel, petrol, and CNG vehicle makers will not be covered under the scheme.

Significance:

The Union Minister Anurag Thakur, while informing about the scheme said that it will enhance the manufacturing capabilities of India.

• Through the Production Linked Incentive Scheme, the auto sector will generate employment for over 7,00,000 people.

A total of 50 auto component makers, 10 vehicle manufacturers, and 5 new non-automotive investors will be benefitted from the scheme.

The PLI Scheme for the auto sector approved by the Union Cabinet will incentivize the emergence of the advanced automotive technologies global supply in India.

PLI Scheme for auto sector: Key Highlights

The newly-announced Production Linked Incentive scheme will be effective from FY23 for the period of 5 years and the base year for the eligibility criteria will be 2019-20.

Under the auto component, a total of 22 components will be covered- hydrogen fuel cell, flex-fuel kit, hybrid energy storage systems, and electric vehicles part, including drive train, charging ports, electric compressors, electric vacuum pump, among others.

The incentive slabs for both the original equipment manufacturers and auto component manufacturers, as well as the new non-automotive investors, will be in the range of 8-10% on determined sales values.

The PLI scheme for the auto sector is part of the overall PLI incentives that were announced for 13 sectors in Union Budget 2021-22.

Fresh investments expected from PLI Scheme:

The Union Minister Anurag Thakur informed that the PLI Scheme will bring fresh investments of over Rs. 42,500 crores in 5 years and the incremental production of over Rs. 2.3 lakh crores.

He further said that the auto companies will have to make investments of Rs. 2,000 crores of new investments over 5 years, whereas 2 and 3 wheelers will have to make an investment of Rs. 1,000 crores.

An investment of Rs. 500 crores will have to be by the component makers over the period of 5 years under the PLI Scheme. The Central Government expects Rs. 5,000 crores investments in the Indian Drone Industry.

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