India govt approves £2.5 billion PLI scheme for auto, drone industries
Indian prime minister Narendra Modi (Photo by MONEY SHARMA/AFP via Getty Images)
THE Narendra Modi cabinet on Wednesday (15) approved a production linked incentive (PLI) scheme worth Rs 26,058 crore (£2.5 billion) for auto, auto components and drone industries to enhance India’s manufacturing capabilities, India’s minister of state for finance Anurag Thakur said.
The PLI scheme will incentivise the emergence of advanced automotive technologies’ global supply chain in India. Incentives worth Rs 26,058 crore will be extended to the industry for a period of more than five years, Thakur told the media after the cabinet meeting.
It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to fresh investment of more than Rs 42,500 crore (£4.1 billion) incremental production of more than Rs 2.3 lakh crore (£22.6 billion) additional employment opportunities of more than 7.5 lakh (0.75 million), the minister said.
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The PLI scheme announced for automobile and drone industries is part of the overall announcement of PLI schemes for 13 sectors made during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore (£19.3 billion).
The scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business, Thakur said.
The scheme 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, he added. 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.
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 scheme will over a period of three years lead to investments worth Rs 5,000 crore (£491 million), an increase in eligible sales of Rs 1,500 crore (£147.4 million) and create additional employment of about 10,000 jobs.