Centre clears ₹26,000 cr PLI scheme for auto sector to boost production of electric cars

On Wednesday, the Union Cabinet, chaired by Prime Minister Narendra Modi, cleared Rs 26,000 crore worth of new Production-Linked Incentive (PLI) scheme for the auto industry, auto-component industry, and drone industry to enhance India's manufacturing capabilities. The scheme focused on Electric vehicles is likely to generate as many as 7.5 lakh jobs for the auto sector, said Union Minister Anurag Thakur.

Under the PIL scheme, the government will provide incentives worth Rs 26,000 crore to automakers manufacturing cars, auto parts, and other related products in India.

The auto component segments covered under this scheme include an electronic power steering system, automatic transmission assembly, sensors, sunroofs, supercapacitors, adaptive front lighting, tyre pressure monitoring system, automatic braking, tyre pressure monitoring system, and collision warning system.

Union Road Transport and Highways Minister Nitin Gadkari said the initiative would be pivotal in boosting the manufacturing of Electric and Hydrogen fuel cell vehicles. 

The PLI scheme will be effective for five years starting from FY'23, and the base year for eligibility criteria would be 2019-20. A total of 10 vehicle manufacturers, 50 auto component makers, and five new non-automotive investors are set to benefit from it.

Auto sector scheme has two components

The scheme for the auto sector is open to existing automotive companies and new investors who are currently not in the automobile manufacturing business. It has two components, namely - Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

• The Champion OEM Incentive is a ‘sales value linked’ scheme applicable to 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.

This PLI scheme for the automotive sector, along with the previously launched PLI scheme for Advanced Chemistry Cell and Faster Adaption of Manufacturing of Electric Vehicles, will enable India to shift from traditional fossil fuel-based automobile transportation system to environmentally cleaner, sustainable, advanced, and more efficient Electric Vehicles (EV) based system.

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