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PLI Scheme In India's Automobile Sector Sees Rs 67,690 Crore Investment
The Production Linked Incentive (PLI) scheme for the automobile and auto components sectors has garnered proposed investments totalling Rs 67,690 crore. By the end of March 2024, Rs 14,043 crore had already been invested, as per the Economic Survey 2023-24 presented in Parliament on Monday. This initiative was introduced in 2020.
Under the PLI scheme, the government allocated Rs 25,938 crore for FY23-FY27. This budget is split between "champion original equipment manufacturers (OEMs)" and "component champion incentive". The Survey highlighted that out of 85 approved applications, approximately 1.48 lakh jobs were projected, with 28,884 jobs created by March 31.
Green Mobility Initiatives
The government has also earmarked Rs 18,100 crore to boost the production of advanced chemistry cell (ACC) batteries by establishing Giga scale ACC and battery manufacturing facilities. On January 24, bids were invited for a total manufacturing capacity of 10 GWh, receiving bids for a cumulative capacity of 70 GWh.
In addition to this, under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II), an outlay of Rs 11,500 crore was approved for five years from FY20 to FY24. This initiative incentivised the purchase of 13,21,800 electric vehicles between FY19 and FY24.
"We expect the government to continue with FAME III with an outlay of around Rs 10,000 crore," said Rajat Mahajan, Partner at Deloitte India. "However, subsidies per vehicle may decrease due to industry growth."
Subsidy Support for Electric Vehicles
Srikumar Krishnamurthy from ICRA stated that subsidy support for electric vehicles is likely to persist through increased budget allocations. This will benefit both manufacturers and consumers by extending incentives to child parts as well. Additionally, investments in EV charging infrastructure and technology are expected to receive incentives.
In FY24 alone, India produced about 49 lakh passenger vehicles, 9.9 lakh three-wheelers, 214.7 lakh two-wheelers, and 10.7 lakh commercial vehicles.
Saurabh Agarwal from EY suggested reopening applications for the auto PLI scheme: "This will enable other OEMs and original equipment suppliers who couldn't decide on investments earlier to apply under the scheme."
Nirmala Sitharaman's seventh Union Budget is on July 23, 2024. This marks a record for any Finance Minister under Modi's third term in office. With inflation affecting common people significantly, there is anticipation about whether this Budget will offer relief to Indians.
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