Cabinet approves Production-Linked Incentive Schemes for auto, drone industries

Cabinet approves Production-Linked Incentive Schemes for auto, drone industries

New Delhi, September 15, 2021

The Union Cabinet today gave its approval for Production-Linked Incentive (PLI) Schemes for the automobile and the drone Industries with a budgetary outlay of Rs 26,058 crore.

The PLI scheme for the auto sector will incentivize high value advanced automotive technology vehicles and products. It will herald a new age in technology besides promoting more efficient and green automotive manufacturing, an official press release said.

This scheme was part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore. With the announcement of PLI Schemes for 13 sectors, the minimum additional production in India is expected to be around Rs 37.5 lakh crore over the next five years and the minimum expected additional employment over the same period is pegged at nearly one crore, the release said.

The PLI Scheme for the auto sector envisages overcoming the cost disabilities to the industry for the manufacture of Advanced Automotive Technology products in India. The incentive structure will encourage the industry to make fresh investments for an indigenous global supply chain of such products. It is estimated that over five years, the PLI Scheme for the Automobile and Auto Components Industry will lead to a fresh investment of more than Rs 42,500 crore. Incremental production of over Rs 2.3 lakh crore and the creation of additional employment opportunities of more than 7.5 lakh jobs are also expected. It will increase India’s share in the global automotive trade.

The PLI Scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in the automobile or auto component manufacturing business. It has two components --Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The Champion OEM Incentive scheme is a "sales value linked" scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments.

The Component Champion Incentive scheme is a "sales value linked" scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors etc.

This PLI Scheme for the automotive sector along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) worth Rs 18,100 crore and Faster Adaption of Manufacturing of Electric Vehicles (FAME) at Rs 10,000 crore will enable India to leapfrog from traditional fossil fuel-based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient Electric Vehicles (EV) based system.

The PLI Scheme for the Drones and Drone components industry addresses the strategic, tactical and operational uses of this revolutionary technology. A product-specific PLI scheme for drones with clear revenue targets and a focus on domestic value addition is key to building capacity and making these key drivers of India’s growth strategy, the release said.

The PLI for the Drones and Drone components industry, will over three years, lead to investments worth Rs 5,000 crore, an increase in eligible sales of Rs 1,500 crore and create additional 10,000 jobs, it added.

NNN

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