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The PLI scheme for the auto industry will lead to investment of over ₹42,500 crore

The Union Cabinet on Wednesday announced a ₹26,058-crore production-linked incentive (PLI) scheme to attract investments in advanced automotive technology vehicles, auto components, and manufacturing of drones, with focus on an environmentally cleaner, sustainable, and more efficient transportation system.

The scheme will create additional employment opportunities for over 750,000 people.  (Mint)

It is estimated that over a period of five years, the scheme for automobiles and auto components will attract fresh investments worth over ₹42,500 crore, which would lead to an incremental production of more than ₹2.3 lakh crore and create additional employment opportunities of over 750,000 jobs, Union minister for information and broadcasting Anurag Thakur said.

“Out of the ₹26,058 crore, ₹25,938 crore will be provider for the auto sector, and ₹120 crore will be allocated to the drone sector,” he said.

Thakur said the scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in the automobile or auto component manufacturing business.

The incentive package for the auto and drone industries is part of the ₹1.97 lakh crore PLI scheme for 13 sectors announced in the Union Budget, which includes pharmaceuticals, telecom, speciality steel, white goods and solar modules, an official statement issued after Wednesday’s Cabinet meet said.

“With the announcement of PLI schemes for 13 sectors, minimum additional production in India is expected to be around ₹37.5 lakh crore over five years and minimum expected additional employment over five years is nearly 1 crore (10 million),” it said.

The scheme for the auto sector has two components – Champion OEM (original equipment manufacturer) Incentive, and Component Champion Incentive. 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 Union minister said.

The Component Champion Incentive scheme is a “sales value linked” scheme applicable on advanced automotive technology components of vehicles, completely knocked down (CKD) or semi-knocked down (SKD) kits, vehicle aggregates of two-wheelers, three-wheelers, passenger vehicles, commercial vehicles and tractors, he added.

This PLI scheme for the automotive sector will enable India to leapfrog to environmentally cleaner, sustainable, advanced and more efficient electric vehicles-based system, he said.