Rs 26,000 cr PLI scheme for auto industry gets green light

The Government of India has approved the PLI (Production-Linked Incentive) scheme for the automobile and drone industry. It has a budgetary outlay of Rs 26,058 crore to incentivise electric vehicle (EV) and hydrogen fuel cell EV (FCEV) manufacturing in the country. However, the amount allocated is less than half of the earlier planned outlay of Rs 57,042 crore, since conventional combustion engine (petrol, diesel or CNG) vehicles have mostly been left out.

• Scheme caters to both automobile and auto components industry
• This is less than half of original planned allocation of Rs 57,042 crore 
• Focus is now primarily on EV manufacturing

What is covered under the PLI scheme?

The PLI scheme caters to both the automobile as well as the auto components industries. For the component sector, the 22 specific products covered under the initiative include EV parts (charging ports, e-drivetrains, electric vacuum pumps and e-compressors), flex fuel kits, hydrogen fuel cells and hybrid energy storage systems. The combustion engine parts under the ambit of PLI include exhaust after-treatment, electronic control units (ECUs) and fuel injection (FI) systems.

Notably, the Rs 26,058-crore boost for the auto sector is excluding the Rs 18,100 crore sum which was earlier earmarked under the PLI scheme for promoting the manufacturing of advanced chemistry cell (ACC) batteries in the country. 

What is the objective of the PLI scheme?

Incentives under the PLI Scheme will be disbursed to the industry over the course of five years. The scheme aims to draw fresh investments of over Rs 42,500 crore by 2026 and promote incremental production of over Rs 2.3 lakh crore for the automobile and auto component industries.

The Centre claims that its latest move will improve manufacturing capabilities and “enable India to leapfrog to environmentally cleaner electric vehicles and hydrogen fuel vehicles.”

The initiative is also expected to create additional employment opportunities for over 7,50,000 people in the automotive sector.

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