The Union Cabinet cleared a new production-linked incentive scheme worth Rs. 26,058 crore aimed at amplifying automobile production in the country. The scheme is expected to focus specially on electric vehicles.
Union Minister Anurag Thakur said the scheme is meant to enhance the country's manufacturing capabilites in the auto, auto components and drone manufacturing industries. It would incentivize the emergence of advanced automotive technologies' global supply chain in India. He added that the scheme would potentially provide employment to over 7.6 lakh people.
Incentives worth Rs 26,058 crores would be provided to the mentioned industries over a period of five years. The PLI scheme will bring fresh investments of over Rs 42,500 crore in five years and incremental production of over Rs 2.3 lakh crore, the minister said.
The PLI scheme for the automobile and drone industry is part of the overall announcement of PLI schemes for 13 sectors earlier announced in Budget 2021-22, with an outlay of Rs 1.97 lakh crore.
The PLI schemes for 13 sectors is expected to bring a minimum additional production approximately worth Rs 37.5 lakh crore over 5 years and additional employment of about one crore in the next five years.
“The incentive structure will encourage industry to make fresh investments for indigenous global supply chain of Advanced Automotive Technology products. It is estimated that over a period of five years, the PLI Scheme for Automobile and Auto Components Industry will lead to 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. Further this will increase India’s share in global automotive trade,” the government said in a statement.
The PLI Scheme for the drones and drone components industry is aimed to address the strategic, tactical and operational uses of the technology. A product-specific PLI scheme for drones with clear revenue targets and focus on domestic value addition is expected to build capacity. The PLI for drones and drone components industry is expected to bring investments worth Rs 5,000 crore over three years, increase in eligible sales of Rs 1,500 crore and create an additional 10,000 jobs.
“The PLI scheme will encourage local investments and aid in reducing dependence on imports. Over the past few years, import content in vehicles has increased owing to changing emission and safety standards. This coupled with increasing sales of EVs makes for a valid case for supporting local investments,” said Shamsher Dewan, vice-president and group head, Corporate Ratings ICRA Limited.