PLIS for Auto worth Rs.26000 crore approved

One more mega PLI scheme allotment has arrived

 PLIS for Auto worth Rs.26000 crore approved

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• The story: The government cleared a Rs 25,938-crore production-linked incentive (PLI) scheme to promote advanced technological products in the auto and auto components sector. Under this, the government will offer up to 18% incentive to eligible investors over a five-year period. Despite a slash in outlay from Rs 57,042 crore announced earlier, it still remains the biggest of the 13 PLI schemes proposed last year to lure large corporations to boost domestic manufacturing and bolster advanced automotive technology supply-chain in India.
• Hope: The government expects the PLI scheme to bring in fresh investments of Rs 42,500 crore over five years, spur incremental production of Rs 2.3 lakh crore and generate 7.5 lakh jobs. All existing and new players will be able to take advantage of the scheme, and not just firms in the clean auto tech space.
• What industry felt: It will accelerate the country’s “progress towards green mobility”, as many meaningful incentives have been offered across the entire value chain engaged in manufacturing of battery-powered electric vehicles and hydrogen fuel cell, as well as their supporting infrastructure and exports. It will also help component manufacturers strive for scale, which will require setting up of new facilities and create more jobs.
• Details of the scheme: It will be effective from FY23 for five years and the base year for the eligibility criteria would be FY20. To be eligible for the incentives, original equipment manufacturers (OEMs) in the auto sector must have a minimum of Rs 10,000 crore in revenue and Rs 3,000-crore investment in fixed assets. Auto-component manufacturers must have minimum revenue of Rs 500 crore and fixed asset investment of Rs 150 crore to qualify for the benefits. New non-automotive investors wishing to tap the scheme must have a global net-worth of Rs 1,000 crore and a clear business plan for investment in advanced automotive technologies.
• One more PLIS: The Cabinet also approved another PLI scheme for the drone industry, promising incentives of Rs 120 crore. The scheme is expected to catalyse investments of Rs 5,000 crore and incremental production of Rs 1,500 crore over three years. The turnover of the current drone industry is just Rs 80 crore. Together with the already-launched advanced chemistry cell scheme worth Rs 18,100 crore and Faster Adaption of Manufacturing of Electric Vehicles (FAME) worth Rs 10,000 crore, the auto PLI scheme will “enable India to leapfrog from traditional fossil fuel based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient electric vehicles-based system”.
• Total PLI: Though PLI schemes for 13 sectors with a total initial outlay of Rs 1.97 lakh crore was announced by November 2020, barring the one for smartphones, not much progress has been made in others. The sectors include advanced chemistry cell, pharma, telecom, food and textiles. Last week, the Cabinet cleared a Rs 10,683-crore PLI scheme for textiles and garments. With Wednesday’s approval for the auto PLI, all these schemes have been accorded Cabinet nod.
• EXAM QUESTIONS: (1) Explain the nature of jobs generation expected from the PLI Schemes of government of India. (2) What is the basic modus operandi in PLIS? Explain analytically.

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