'PLI for auto aims to ramp up new technologies in the sector'

PLI scheme for the auto sector primarily aims to target two areas. OEM incentive scheme is linked to value sales and is applicable on battery electric and hydrogen fuel cell vehicles of all segments

The newly-introduced production-linked incentive (PLI) scheme for the automobile sector is aimed at augmenting 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.

Under the scheme, projects that focus on newer segments, such as electric and hydrogen fuel cell vehicles, will be incentivised. Existing technologies in the internal combustion engine (ICE) space will be kept out of the purview of the new PLI.

“Since ICE is an old technology, there is no need to incentivise. What we are not manufacturing today – electric and hydrogen fuel cell vehicles - but will be there in future, need to be incentivised,” said Goel.

According to him, the scheme will be notified soon, along with detailed guidelines.

"After consultation with all industry stakeholders, the government has identified the additional requirements. The cost disabilities, pointed out by the industry, have been fully met with the incentive, which is going to be paid to the extent of up to 18 per cent," he added.

Manufacturers in India are well-equipped with the conventional ICE technology and all key components are being manufactured locally. The need for focusing on newer technologies is crucial since India's share in these segments stands at a meagre 3 percent, compared to 18 per cent globally. Worldwide, the share of advanced automotive technologies will reach 30 per cent 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 chain, which is weak, dormant or non-existent", said Goel.

The PLI scheme for the automotive sector primarily aims to target two areas. The original equipment manufacturer incentive scheme is linked to value sales and is applicable on electric and hydrogen fuel cell vehicles of all segments.

The component incentive scheme is a sales value-linked scheme, applicable on advanced automotive technology components of vehicles, completely knocked down/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 to local manufacturers to adapt to future technologies faster and is aimed in the right direction.