Central government approved the Production Linked Incentive Scheme (PLI) for automobiles and ancillaries on Wednesday. The scheme is expected to catapult India to the global forefront in this industry, making it a part of the global value chain, according to industry experts. According to a report by Economic Times, the Department of Heavy Industries (DHI), the implementing ministry for the plan, is expected to shortly detail the eligibility criteria to identify ‘scalable champions’ on the metrics of turnover, exports, and growth history. Companies meeting the criteria will be eligible for incentives intended to boost local factory output and exports, said a senior industry executive.
The amount approved by the government is to the tune of Rs 145,980 crore for enhancing manufacturing capabilities and exports in 10 identified sectors.
The highest allocation - amounting to 39 percent of the overall outlay – has been made to the auto and auto component sectors. “The automotive industry is a major economic contributor in India. The PLI scheme will make the Indian automotive industry more competitive and will enhance globalization of the Indian automotive sector,” the government said in a statement.
An additional Rs 18,100 crore has been earmarked under the scheme for companies engaged in manufacturing advance chemistry cell (ACC) battery. The proposal will be formulated by Niti Aayog and Department of Heavy Industries.
“The industry was eagerly awaiting this scheme to increase its competitiveness and take the growth of the sector to the next level,” said Kenichi Ayukawa, President of the Society of Indian Automobile Manufacturers (SIAM).
To expand presence globally, automakers in the local market have been working at doubling exports in the next five years. Although the PLI details are yet to be published, industry insiders expect the incentives would help make manufacturing vehicles in India more competitive and scale up exports. Automakers exported 4.77 million vehicles in FY20.
“The announcement of the approval of the PLI scheme for the auto and auto component sector is indeed a very welcome step to make the industry ‘Atmanirbhar’ and globally competitive,” said Deepak Jain, President, Automotive Component Manufacturers Association (ACMA). (Source: Economic Times)
