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115 companies applied for PLI scheme for automobile and auto component industry: MHI

The Ministry of Heavy Industries, India has announced that a total of 115 companies have filed their application under the Production Linked Incentive (PLI) Scheme for Automobile and Auto Component Industry which was notified on 23rd September 2021.

The scheme was open for accepting applications till 23:59:59 hours IST on 9th January 2022. Incentives are applicable under the scheme for determining sales of Advanced Automotive Technology (AAT) products (vehicles and components) manufactured in India from 1st April 2022 onwards for five consecutive years.

The Government has approved the Production Linked Incentive (PLI) Scheme for the Automobile and Auto Components Industry in India for Enhancing India's Manufacturing Capabilities for Advanced Automotive Products with a budgetary outlay of Rs.25,938 crore. The Production Linked Incentive (PLI) Scheme for Automobile and Auto components proposes financial incentives to boost domestic manufacturing of Advanced Automotive Technology products and attract investments in the automotive manufacturing value chain.

Its prime objectives include overcoming cost disabilities, creating economies of scale, and building a robust supply chain in areas of Advanced Automotive Technology products. It will also generate employment. This scheme will facilitate the Automobile Industry to move up the value chain into higher value-added products.

Category-wise distribution of applications received (Source: Ministry of Heavy Industries, India)

The PLI scheme for the auto sector will incentivize high-value Advanced Automotive Technology vehicles and products. It will herald a new age in higher technology, more efficient and green automotive manufacturing. The PLI Scheme for the auto sector envisages overcoming the cost disabilities to the industry for manufacturing of Advanced Automotive Technology products in India. The incentive structure will encourage the industry to make fresh investments in indigenous supply chain/ deep localization of Advanced Automotive Technology products.

The PLI Scheme for the auto sector was open to existing automotive companies as well as new investors who are currently not in the automobile or auto component manufacturing business. The scheme has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme. 

The Champion OEM Incentive scheme is a 'sales value linked' scheme, applicable on 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 two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, and tractors, etc.

This PLI Scheme for the automotive sector (Rs.25,938 crore) along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) (Rs.18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (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.

Author : Moulin Oza
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