With the Central government having announced what is being considered as a definite enabler for self-reliance in various industrial sectors including automotive, the production-linked incentive (PLI) scheme is one of the biggest fund allocationpoliciesin recent times with a total outlay of Rs 145,980 crore.
The aim of this scheme is to drive localisation, boost manufacturing and enhance exports from India, and a clear weightage has been given to the automobile and auto components sector, falling under the aegis of the Department of Heavy Industries (DHI) with the largest share of Rs 57,042 crore to be availed over five years.
While another crucial area of electronics and technology products under the Ministry of Electronics and Information Technology (MEIT) has also been allocated Rs 5,000 crore, it is the specific sub-category of automotive electronics that hasnot been clearly defined in the scheme.
Given the rapid pace and the extent of electronics making inroads into vehicles of all shapes and sizes, particularly those in the passenger car and two-wheeler segments, the Automotive Component Manufacturers Association of India (ACMA), has recommended the government to create an individual PLI for the said category.
In an interview with Autocar Professional, Vinnie Mehta, director general, ACMA, said, “What is important for us is to see how we can grow manufacturing in India and enhance localisation. And if auto electronics is going to comprise about 20-25 percent of the cost of a vehicle in the future, we need to de-risk from a foreign exchange perspective as well.”
“Since we do not have a sizeable presence in this area, our expectation is that the PLI scheme should bring the right way forward for the localisation and manufacturing of auto electronics in the country.
“Therefore, we would request the Ministry of Electronics and Information Technology (MEIT) to include auto electronics manufacturing in the scheme for promotion of manufacturing of electronic components and semiconductors (SPECS) or introduce a standalone PLI scheme to push auto electronics manufacturing in the country,” he added.
With the dawn of a risk-aversive world after the outbreak of the coronavirus pandemic, economies are looking to de-risk their supply chains by not relying on a single source. As a result, India too has its task cut out as well as an opportunity to hedge its industrial production heavily reliant on electronics products by becoming self-reliant in this area.
According to Mehta, “A lot of the Indian component players have already struck JVs in the area of auto electronics and have positioned themselves to be able to move to the next level quickly. So, at this point if there is a policy that can act as an enabler, it would certainly enhance the pace.”
On December 16, while presenting ACMA’s performance review for the first half of FY2021, ACMA president Deepak Jain said: “Going forward, whilst the performance of the industry during the festive season has been heartening, there are indications that the vehicle demand, in the coming months, will be sustained. This, together with the increased focus by the auto industry on deep-localisation and the recent announcement of PLI schemes for the automotive sector and cell/battery manufacturing by the Government, augur well towards making the auto-component industry a self-reliant one. We are also hopeful that the Government would consider PLI or appropriate manufacturing schemes for auto-electronics and xEV components as well.”