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Cabinet approves PLI scheme for automobile and drone industry

The government wants to give a push to new green technologies

PTI14-09-2020_000164B Union minister Anurag Thakur

The Union cabinet has approved the production linked incentive (PLI) scheme for automobile and drone industry with a budgetary outlay of Rs 26,058 crore.  Along with the earlier PLI scheme for the auto sector, the government wants to give a push to new green technologies so that dependence on the fossil fuels is reduced.

With this announcement, the government has completed the PLI schemes for 13 sectors that it had announced during the budget with an outlay of Rs 1.97 lakh crore. The government says the additional production in India is expected to be around Rs 37.5 lakh crore over five years and minimum expected additional employment over five years is nearly one crore.

In case of the automotive sector, the PLI scheme will incentivize high value advanced automotive technology vehicles and products. 

“It will herald a new age in higher technology, more efficient and green automotive manufacturing,” Union minister Anurag Thakur said.

The PLI scheme envisages to overcome the cost disabilities to the industry for manufacture of AAT products in India by incentivising them to make fresh investments for indigenous global supply chain of Advanced Automotive Technology products.

“It is estimated that over a period of five years, the PLI Scheme for Automobile and Auto Components Industry will lead to fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs. Further this will increase India’s share in global automotive trade.

The PLI scheme will be open to existing players and even the new ones. It will have a separate component - Champion OEM Incentive scheme  - a ‘sales value linked’ scheme, applicable on battery electric vehicles and hydrogen fuel cell vehicles of all segments.

Earlier, the government had launched a PLI scheme for Advanced Chemistry Cell (ACC) (₹18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (₹10,000 crore). The government is hopeful that clubbed with the new scheme, it 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.

To give a fillip to the drones and its components industry, the PLI scheme will  incentivise their manufacturing for “strategic, tactical and operational uses of this revolutionary technology.”  

A product specific PLI scheme for drones with clear revenue targets and focus on domestic value addition is key to building capacity and making these key drivers of India’s growth strategy. The PLI for drones and drone components industry, will over a period of three years, lead to investments worth ₹ 5,000 crore, increase in eligible sales of ₹ 1500 crore and create additional employment of about 10,000 jobs, the government said.

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