The newly introduced production linked incentive (PLI) scheme for the automobile sector is aimed at boosting India’s capabilities in new technologies. The project worth Rs 26,000 crore of government incentives will help grow India’s share in advanced automotive technologies and bring it closer to global standards, said Arun Goel, secretary, Ministry of Heavy Industries.
According to him, under the scheme projects that focuses on newer segments like electric and hydrogen fuel cell vehicles, will be incentivised. Existing technologies in the internal combustion engine (ICE) space would be kept out of the purview of the new PLI.
“In terms of vehicles, because ICE is an old technology, it’s already existing, there is no need to incentivise. What we are not manufacturing today – EV, hydrogen fuel cell vehicles, which will be there in the future, so that’s what is being incentivised,” he said.
According to him, the scheme will be notified soon along with detailed guidelines.
“After consultation with all industry stakeholders, the government has identified the additions requirements. The cost disabilities, pointed out by the industry, has been fully met with the incentive, which is going to be paid to the extent of up to 18 per cent”, the secretary said.
Manufacturers in India are well equipped with the conventional ICE technologies and all key components are being manufactured locally in enough capacities, the need for focusing on newer technologies is crucial as India’s share in these segments stands at a meagre three percent, compared to 18 percent globally. Further, globally the share of advanced automotive technologies will reach 30 percent by 2030.
For ICE, “we have sufficient capacity in our country and we have strong supply chains. So what we are incentivising is the supply chains which are weak, dormant or non-existent”, said Goel.
The PLI scheme for the auto sector primarily aims to target two areas. The OEM incentive scheme is linked to value sales and is applicable on battery electric and hydrogen fuel cell vehicles of all segments.
While, the component incentive scheme covers advanced automotive technology components of vehicles, completely knocked down and semi knocked down kits, vehicle aggregates of two-wheelers, three-wheelers, passenger vehicles, commercial vehicles and tractors.
According to Vinnie Mehta, director general, Automotive Component Manufacturers Association of India, the scheme for component parts provides opportunity for local manufacturers to adapt the future technologies faster and is aimed at the right direction.