Centre Approves ₹26,000 Crore PLI Scheme for Auto Sector to Boost EV Production

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Taking steps forward towards the vision of an ‘Aatmanirbhar Bharat’, 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 and will herald a new age in higher technology, more efficient and green automotive manufacturing, said Union Minister Anurag Thakur.

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 ₹42,500 crore, incremental production of over ₹2.3 lakh crore.

The PLI Scheme for auto sector is open to existing automotive companies as well as new investors who are currently not in 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 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors etc.

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

PLI Scheme for Automobile Industry and Drone Industry is part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of ₹ 1.97 lakh crore. With the announcement of PLI Schemes for 13 sectors, minimum additional production in India is expected to be around ₹ 37.5 lakh crore over 5 years and minimum expected additional employment over 5 years is nearly 1 crore.

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