Cabinet approves PLI for the auto industry in order to promote ‘green’ and high-tech manufacturing.

The Union Cabinet approved a plan to promote domestic fabrication of high-quality automotive technologies, components, and drones on Wednesday for Rs. 26,058 crores production-related incentive (PLI).

Over the next five years, the government estimates that the scheme will attract 42,500 crores in new automotive investments, resulting in more than 2.3 lakh crore of production and over 7.5 lakh jobs. According to the company, “it will usher in a new era of higher technology, greater efficiency, and environmentally friendly car manufacturing.”

This scheme was created for existing automotive firms as well as new investors at a time when the industry is still reeling from the effects of an economic slowdown and a pandemic.

The sales value connected’ scheme is divided into two parts. A Champion OEM incentive is available for all segments of electronic vehicles and hydrogen cell cars, whereas a Champion OEM incentive is available for vehicles components of advanced automotive technology, CKD/SKD kits, vehicle addups of 2-wheelers, 3-wheelers, passenger cars, commercial vehicles, and tractors.

Cost Cutting in Vehicles

The PLI programme aims to assist the industry in overcoming cost barriers in the country’s production of cutting-edge automotive technologies. Its incentive structure should encourage new investments in a local supply chain for such products. According to state officials, the 18.100-crore Advanced Chemicals Cell and the 10.000-crore Faster Adoption of FAME PLI systems are intended to boost EV production.

Furthermore, the drone and drone PLI scheme is expected to generate 5,000 pounds of investment and 1,500 pounds of eligible sales over the course of three years. The government anticipates that 10,000 new jobs will be created.

This PLI will encourage new edge technology

Sunjay Kapur, Chair of the Association of Indonesian Automotive Component Manufacturers, stated that the PLI scheme would encourage new age automotive technology investment in areas such as automated drive assembly, power steering system, sensors, super condensers, ECUs, electric car parts, and hydrogen fuel cells, as well as components of these technologies, over a five-year period beginning in 2022-23.

“The priority to encourage new-age technologies will make the development of the state-of-the-art automotive value chain easier and will provide much-needed momentum for the manufacture of state-of-the-art car products in India,” Mr. Kapur said. “As the global economy de-risks supply chains, the PLI will help India develop into a valuable alternate source for high-end automation components,” he added.

According to Tata Motors Managing Director Girish Wagh, the Scheme was both progressive and transformational, providing significant incentives for the entire value chain for the manufacturing and support of infrastructure and exports for electric battery powered vehicles and hydrogen fuel cells.


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