Cabinet approves PLI scheme of 25,938 crores for auto sector, know which companies will benefit

The Union Cabinet has approved the Production Linked Incentive (PLI) scheme for the automobile sector. Union Minister Anurag Thakur said that the Government has approved Production Linked Incentive Scheme for Auto Industry, Auto-Components Industry and Drone Industry to enhance India’s manufacturing capabilities. A budget of Rs 26,058 crore has been fixed in this PLI scheme, of which Rs 25,938 crore is for the auto sector and Rs 120 crore for the drone industry.

According to CNBC-TV18, a PLI scheme of Rs 57,000 crore was initially approved for vehicle and component makers. However, this has now been reduced to Rs 26,000 crore. This is because the benefit of this scheme will now be available to only electric and hydrogen fueled vehicles, while petrol, diesel and CNG vehicle makers will not be covered under this scheme.

A total of 22 components, including flex fuel kits, hydrogen fuel cells, hybrid energy storage systems and parts of electric vehicles including charging ports, drive trains, electric vacuum pumps and electric compressors, will benefit from the Auto Components PLI scheme. Apart from this, a sunroof and electronic stability control have also been added to the component PLI scheme.

Petrol and diesel engine components, exhaust, after treatment and FIE systems and ECU, automatic transmission assembly and electronic power steering system are also part of the scheme. Sources had earlier said, following feedback from the Prime Minister’s Office, the scheme has been changed with a focus on advanced automotive technology.

The government is of the view that India’s share in global automotive exports is less than 2 per cent and hence there is a need to promote advanced technologies such as hydrogen and electric vehicles.

The PLI scheme for the auto sector will be effective for five years from fiscal year 23 and the base year for the eligibility criteria will be 2019-20. A total of 10 automakers, 50 auto component makers and five new non-automotive investors will benefit from this scheme.

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