The PLI Scheme And Its Benefits For The Auto Sector?

The Indian government on September 16 dispensed Rs 26,058 crore for the production-linked incentive (PLI) scheme for the auto and drone sector. A sum of Rs 25,938 crore has been allocated for the auto sector and Rs 120 crore for the drone sector, to increase the production of electric vehicles, drones, and hydrogen fuel vehicles. The scheme is expected to generate around 7.5 lakh jobs for the auto sector.

As per the PLI scheme’s eligibility criteria set by the government, those automobile companies can avail the benefits of the scheme that will invest Rs 2,000 crore for four-wheelers and Rs 1,000 crore for two-wheelers for five years. This scheme will not only benefit existing automotive companies but also new investors who are presently not in the automobile or auto component manufacturing business, said Anurag Thakur, Minister of Information and Broadcasting of India.

The auto component segments that are covered under the PLI scheme include an electronic power steering system, automatic transmission assembly, sensors, sunroofs, adaptive front lighting, supercapacitors, tyre pressure monitoring system, automatic braking and collision warning system.

While announcing the scheme, the government also emphasised on eco-friendly vehicles. It also stressed that the PLI scheme will work collectively with the Faster Adoption and Manufacture of EVs (FAME II) scheme to meet all requirements of the electric vehicle ecosystem.

For now, the PLI scheme is focused on emerging technologies as it is dealing with the EV sector. A total of 22 components have been covered under the auto components’ PLI scheme, including flex-fuel kit, hydrogen fuel cell, hybrid energy storage systems and electric vehicles parts like charging ports, drive train, electric vacuum pump, and electric compressors.

The PLI scheme for the auto sector is part of the overall production-linked incentives announced for 13 sectors in the Budget 2021-22 with an outlay of Rs 1.97 lakh crore.

Previously, the Society of Indian Automobile Manufacturers (SIAM), an auto industry body, said the PLI scheme will boost the growth of the sector while increasing competition.

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