Auto PLI will foster Rs 2.3-trn additional investment over 5 yrs: Arun Goel

In a Q&A, Heavy Industries Secretary breaks down the nitty-gritty of the selection process

Last week 20 companies, including large ones like Tata Motors, Suzuki Motor Gujarat, Mahindra & Mahindra, Hyundai and Kia Motors were slected under the Production Linked Incentive (PLI) scheme for the automobile industry. In this interview with Arindam Majumder, Arun Goel, secretary at Heavy Industries Ministry which conceptualised the scheme breaks down the nitty-gritty of the process. Edited excerpts:

What were the criteria based on which the companies were shortlisted?

There are different criteria for different categories--four-wheelers, two- and three-wheelers, new-age vehicles. So whoever has fulfilled those criteria were shortlisted. This was not a process of elimination. It was a very transparently-run process.

What was the thought process behind having a production-linked incentive scheme for an established manufacturing sector like automobile?

We wanted to attract manufacturing of those components of the global supply chain of the automobile sector which are not present in India---we have incentivised only those.

But besides new-age clean energy vehicles, traditional IC engine makers have also been selected...

We haven’t excluded anyone. IC engine makers will be incentivised for manufacturing but not for what was already being made in India. Even in the supply chain of IC engines, a large number of product lists are being imported. We want items like electronics, airbags to be made in India and not imported.

How will the government monitor if the stated targets by the companies are actually being met?

There is no monitoring agency. The criteria are based on sales of the product which has been certified to be eligible. It’s similar to FAME. Sales of auto products are captured through VAHAN portal. On the basis of sale and pre-fixed ratio, the incentive will be given.

Each company will submit data on an annual basis and they will get the incentive for that next financial year. No real incentive will be given before. It will only be after the actuals are met.

Can the funding size of the scheme increase if there are more applicants?

No, the funding here has an upper ceiling of Rs 25,938 crore. In case the calculated incentive pay-out exceeds the budgetary outlay, the scheme could be exhausted earlier than the five-year period.

Multiple EV startups have said that the eligibility criteria were so high that they have been excluded from the scheme.

Look at the number of applications and successful applicants. The response is manifold higher than originally envisaged.

During COVID, there has been a concerted effort from manufacturers to de-risk themselves by shifting production from a single location like China. How much incremental advantage will India be able to get from this?

We envisage that the production-linked incentive scheme policy will lead to incremental production of Rs 2,31,500 crore which was earlier being imported over a period of five years. This will also result in creation of seven and half lakh jobs.