PLI for auto to create 7.5 lakh additional jobs in 5 years, says official

PLI Scheme for automobile and auto components sector will lead to creation of 7.5 lakh additional jobs and incremental production worth Rs 2,31,500 crore over next five years, a top official said

The Production Linked Incentives Scheme for the automobile and auto components sector will lead to creation of 7.5 lakh additional jobs and incremental production worth Rs 2,31,500 crore over the next five years, a top official said on Monday.

Ford, Tata Motors, Suzuki, Hyundai, Kia and Mahindra & Mahindra are among the 20 companies that will be eligible for receiving incentives under the Production Linked Incentives (PLI) Scheme for the automobile and auto components sector, PTI reported last week.

The applicants have been approved under the Champion Original Equipment Manufacturers (OEM) Incentives scheme.

"The 20 companies we selected have committed an investment of more than Rs 45,000 crore. So as per our scheme target, our scheme is of Rs 25,938 crore, so we expect this will lead to incremental production of Rs 2,31,500 crore," Secretary in the Heavy Industry Ministry Arun Goel told PTI in an interview.

Highlighting that the scheme gives incentives only on such products which are presently not being made in India, Goel said therefore the incremental production figure implies we would have otherwise imported products to the tune of Rs 2,31,500 crore, thereby strengthening the government's vision of Aatmanirbhar Bharat.

The Secretary shared that the emphasis on Made in India comes with the condition that at least 50 per cent of the value addition must be carried out domestically, by going up to Tier 3, which includes the micro, small and medium enterprises.

"So, if somebody is importing cars from outside India and just screwing them up here, assembling them, he will not get benefits under the scheme. He has to produce at at least 50 per cent in India in terms of value addition," Goel said.

The Heavy Industry Secretary pointed out that consequently, MSMEs' revenues will increase leading to job creation.

"So we are estimating 7.5 lakh additional jobs to be created in India as a result of this scheme in the next five years," Goel said.

The 20 applicants selected include Ashok Leyland, Eicher Motors, Ford India, Hyundai Motor India, Kia India, Mahindra & Mahindra, PCA Automobiles India, Pinnacle Mobility Solutions, Suzuki Motor Gujarat and Tata Motors Limited. This category does not include two wheelers and three wheelers.

Under incentives for two wheeler and three wheelers manufacturers, Bajaj Auto, Hero MotoCorp, Piaggio Vehicles and TVS Motor have been selected.

Firms selected under the new Non-Automotive Investor (OEM) category include Axis Clean Mobility, Booma Innovative Transport Solutions, Elest, Hop Electric Manufacturing, Ola Electric Technologies, and Powerhaul Vehicle.

Incentives are applicable under the scheme for determined sales of advanced automotive technology (AAT) products (vehicles and components) manufactured in India from 1st April 2022 onwards for a period of five consecutive years.

The government approved the scheme for enhancing India's manufacturing capabilities for advanced automotive products with a budgetary outlay of Rs 25,938 crore.

The incentive up to 18 per cent is to encourage industry to make fresh investments in indigenous supply chain of advanced automotive technology products of PLI Scheme for the auto sector to enable India to leapfrog to environmentally cleaner, sustainable, advanced and more efficient electric vehicles (EV) based system.

A total of 115 companies had filed their application under the PLI scheme for automobile and auto component industry which was notified on September 23, 2021.