Government approves revised PLI scheme for automobile and drone sector

In a bid to promote alternative fuel vehicles in India, the Government has announced the revised Production-Linked Incentive (PLI) scheme. The PLI scheme aims to ramp up manufacturing of auto components, boost the production of electric and hydrogen fuel-cell vehicles, and generate more jobs in the automobile sector, which has also been impacted by the semiconductor shortage and the ongoing pandemic. Auto component manufacturers and OEMs will be offered incentives worth Rs 26,000 crore through the PLI scheme, which will be applicable from 2023 onwards.

It is estimated that the PLI scheme will bring in fresh investments of more than Rs 42,500 crore over a period of five years along with an incremental production of Rs 2.3 crore. To be eligible for the PLI scheme, existing OEMs will need to invest Rs 1000 crore over a period of five years, while newer entrants will be required to invest Rs 2000 crore over the same time period. This will not only strengthen the Indian automobile sector, but it will also create and improve the infrastructure for electric and hydrogen fuel-cell vehicles in the country. Auto component manufacturers will also be covered under this scheme. New manufacturers will need to invest Rs 500 crore, while existing manufacturers will need to invest Rs 250 crore. The PLI scheme attempts to promote future technology by covering components such as , autonomous driving, adaptive headlamps, automatic transmission assembly, tyre-pressure monitoring systems, and collision warning system among others.

It is important to note that internal combustion manufacturers are not included in this scheme.

This news comes at a time when most manufacturers have announced their green mobility plans. With manufacturers bringing in electric vehicles such as the Audi e-tron, Mercedes-Benz EQC, and even mass-market products like the Tata Tigor EV, Tata Nexon EV, and the MG ZS EV, the PLI scheme is surely a welcome move. More recently, Hyundai also announced its plans of committing to hydrogen fuel-cell technology. Electric two-wheelers are also becoming an interesting prospect with the recent launch of the Ola S1, and existing players in the segment such as the Ather 450X, the Bajaj Chetak, and the TVS iQube. The revised PLI scheme makes it easier for manufacturers to invest in alternative fuel sources and technology that could be incorporated in vehicles in the near future, as they will receive incentives on the basis of their scale of production.