In what is a big positive for India Auto Inc, the government of India has approved the PLI (Production-Linked Incentive) scheme for the automobile and the drone industry. It has a budgetary outlay of Rs 26,058 crore to incentivise electric vehicle (EV) and fuel cell EV manufacturing. This amount is half of the earlier outlay of around Rs 57,000 crore since conventional IC engine (petrol, diesel) or CNG are not covered.
The PLI Scheme aims to draw fresh investments of over Rs 42,500 crore by 2026 and incremental production of over Rs 2.3 lakh crore for the automobile and auto component industries. It will also improve manufacturing capabilities and “enable India to leapfrog to environmentally cleaner electric vehicles and hydrogen fuel vehicles.
The PLI scheme, which is expected to create additional employment opportunities for more than 750,000 people in the automotive sector, and encourages industry to manufacture advanced products. Mainly, it gives a big boost to production of electric vehicles (EVs) and encourages production of hydrogen fuel vehicles.
Earlier, the Government of India had announced the PLI for ACC batteries with an outlay of Rs. 18,100 crore (~USD 2.5 billion) aimed at inviting investments for manufacturing for advanced energy storage technology batteries, a first step towards creating a robust infrastructure for electric mobility in India.
For the auto component sector, the 22 specific products covered under the PLI Scheme include EV parts (charging ports, e-drivetrain, electric vacuum pump and e-compressor), flex fuel kits, hydrogen fuel cells and hybrid energy storage systems. The IC engine parts covered under PLI include exhaust, aftertreatment, ECU and FI systems.
While the focus is heavily on promotiom of manufacturing of eco-friendly vehicles like EVs and FCEVs, there is little cheer for manufacturers of IC engine vehicles, which have improved over the years and on which OEMs and suppliers invested heavily in recent years for the leapfrogging of technology from BS IV to BS VI.
India Auto Inc lauds Centre's decision
Vinod Aggarwal, Treasurer, SIAM and MD & CEO, VECV: “Production Link Incentive Scheme for automotive will result in ushering in more advanced technologies for new vehicles in our country. Such technologies will now be introduced much faster, than what we have been seeing in last several years. Focus on next generation sensor-based safety and collision avoidance systems would go a long way in making the vehicles and our roads one of the safest in the world. PLI will also provide an opportunity for the auto industry to increase its electric portfolios, as it will supplement the existing incentives of FAME and lower GST, for these vehicles.”
Sunjay Kapur, President, ACMA: “ACMA is grateful to the Prime Minister of India, Narendra Modi for the announcement of the PLI scheme for the auto and auto components industry. In accordance with our national priorities of energy security and climate change & environment, the PLI scheme envisions creation of an ‘Atmanirbhar’ (self-reliant), globally competitive and future-ready Indian automotive sector. Thrust on incentivising new age technologies will facilitate creation of a state-of-the-art automotive value chain in the country and give a much-needed impetus to manufacturing of cutting edge automotive products in India."
He added, "Further, with global economies de-risking their supply chains, the PLI will aid India in developing into an attractive alternative source of high-end auto components”.
Venu Srinivasan, Chairman, TVS Motor Co: “The revised focus of the PLI scheme on alternative fuels, EVs and utilisation of advanced technological innovation, will help the industry move faster towards the future technologies. There is a sense of haste in developing these technologies in India and this scheme gives the right impetus to the industry to move rapidly in that direction. Any country which aspires to lead in a particular sector needs government support and this scheme aims to do just that in the future mobility space. The pandemic has taught us the essence of Aatmanirbharta in every aspect possible. Hence, this is a significant push by the government for its workforce, organisations (OEMs), and the consumers to seek competitive, diverse, and climate conscious mobility solutions and a progressive India.”
Shailesh Chandra, President, PVBU, Tata Motors: “The government has taken a holistic approach to make India 'Aatmanirbhar', especially in technology areas, that will be relevant and important in future. The scheme promotes manufacturing, export of EVs and those running on hydrogen fuel cells, their supporting infrastructure, as well as new technology auto parts requiring advanced production techniques. A progressive scheme which will help in accelerating transition to smart, environment-friendly, sustainable mobility solutions. The automotive ecosystem will benefit tremendously as more jobs will be created, component manufacturers can plan their future roadmap better and achieve scale. It is indeed a very strong resolve shown by the government to fulfill the aspiration of India, by becoming a global manufacturing hub of green mobility."
Girish Wagh, Executive Director, Tata Motors: “We at Tata Motors are much encouraged with the new PLI scheme announced for the auto sector. This scheme is both progressive and transformational. It reiterates India’s holistic commitment to a sustainable future and accelerates the country’s progress towards green mobility. Several meaningful incentives have been offered across the entire value chain engaged in manufacturing of battery powered EVs and hydrogen fuel cell, as well as their supporting infrastructure and exports. Encouraging production of auto components using advanced technologies will boost localisation, domestic manufacturing and also attract foreign investments. This will help component manufacturers strive for scale, which will require setting up of new facilities and create more jobs. With auto being a strategically important sector of the economy, the benefits accrued overall will result in a multiplier effect..”
Naveen Munjal, MD, Hero Electric: “The recent announcements by the government of India over the last few months have helped propel the EV industry onto its next level. The earlier push through amendments to FAME II and added revisions by various states have been absolute game-changers in bringing down the prices of EVs. With this announcement of allocating a total of Rs 26,000 crore to encourage and push adoption of cleaner mobility and technologies, this sector is poised to grow exponentially from here on. The outlay for OEM makers and other incentives on manufacturing auto components that help making transportation cleaner will encourage investments and further drive localisation. This will further help bring down the cost of manufacturing thereby benefiting the consumer, the industry and the environment.”
Sohinder Gill, CEO, Hero Electric: “Since the amendments to FAME in June, we have seen a wonderful response to EVs from the consumer end and now with the PLI scheme, we expect the same to come in from potential investors and companies looking to invest in technologies that will make products for cleaner modes of transport. The allotment of Rs.26,000 crore will help in creating the initial push required for the industry to further take off and encourage further adoption of EVs- two-, three- and four-wheelers.”
Bhavish Aggarwal, Chairman and Group CEO, Ola: "What a momentous occasion with the Auto PLI approval by Cabinet. India will become a global EV hub thanks to this visionary step."
Manish Bhatnagar, MD, SKF India: "The automotive sector has been one of the most affected sectors and had contributed to the economic slowdown. The cabinet's approval of the revised PLI scheme will boost the confidence of Indian automotive manufacturers and provide much-needed relief to industries. The scheme is poised to bolster the manufacturing of EVs and hydrogen fuel vehicles in India, and the industry will benefit from such a move. We are also investing in new technology, adapting, and redesigning conventional bearings. Our customised and hybrid bearings are already solving the fundamental issues and increasing reliability in electric vehicles.”
Satyakam Arya, MD and CEO, Daimler India Commercial Vehicles (DICV): “As a leading manufacturer and exporter of commercial vehicles, as well as a front runner in technology since inception, Daimler India Commercial Vehicles welcomes the opportunities offered by the newly announced PLI scheme. This initiative will encourage investment in vital technologies related to sustainability, carbon neutrality and more."
Chetan Maini, co-founder and chairman, Sun Mobility: “We thank the government of India for quickly ratifying and implementing the Production Linked Incentive (PLI) scheme for the automobile industry. The outlay of Rs 26,058 crore over the next five years under the PLI scheme will reinvent R&D and manufacturing making it more innovative while at the same time increasing opportunities for greater employment. We are delighted that the PLI scheme is technology agnostic which gives consumer access and choice to every green technology. The FAME policy is already accelerating the adoption of EVs and now the PLI schemes for both Advanced Chemistry Cells (ACC) and manufacturing will see India quickly becoming a global hub for development and manufacturing of EV related technologies. Sun Mobility has been investing consistently towards making affordable EV technology in India and this new scheme will further accelerate us towards our goal of having 1 million EVs use our platform by 2025.”
Aakash Minda, ED, Minda Corporation: “The recent announcement of the production linked incentive announced by the Union Cabinet will immensely support the automotive industry to build up its strength that the recent Covid crisis had shaken up. It will bring a substantial stimulus to advance technology products for ICE and EV vehicles where Spark Minda is also committed to create value through dynamic and innovative automotive mobility solutions. A major boost towards EV components while being a game changer for the growth of domestic manufacturing and technology partnerships through joint ventures will also help to realise the mission of Atmanirbhar Bharat.”