The Government of India has approved a Rs 26,000 crore Production-Linked Incentive (PLI) scheme for the auto and drone sector. Out of Rs 26,058 crore, Rs 25,938 crore has been earmarked for the automobile sector and Rs 120 crore for the drone sector, for promoting the production of drones, electric vehicles and hydrogen fueled vehicles. India’s Information and Broadcasting Minister Anurag Thakur said that as per the announcement, automobile companies that invest Rs 2,000 crore for four wheelers and Rs 1,000 crore for two wheelers will be eligible for the government’s PLI scheme for 5 years.
Read also: Cabinet approves ₹ 26,000 crore incentive to promote clean fuel vehicles
The PLI scheme will benefit existing companies as well as new investors investing in the automobile and auto component manufacturing business. There will be a clear focus on EVs.
The PLI scheme will benefit existing automotive companies as well as new investors who are not currently in the automobile or auto component manufacturing business. While announcing the scheme, the government underlined the focus on environmentally clean vehicles. The Minister of Information and Broadcasting stresses the importance that the PLI scheme will work in tandem with the FAME II (Rapid Adoption and Manufacturing of EVs) scheme to meet all the requirements of the electric vehicle ecosystem. Naturally, the response from the auto sector, especially those in the electric vehicle segment, has been encouraging.
Mainstream manufacturers like TVS Motor Company have plans to expand their EV line-up in the coming years.
“The revised focus of the PLI scheme on the use of alternative fuels, electric vehicles and advanced technological innovation, will help the industry to move rapidly towards futuristic technologies. There is a sense of haste in developing these technologies in India and the plan is the right impetus. Gives the industry to move faster in that direction.Any country which aspires to take the lead in a particular field needs government support and this scheme aims to do the same in the field of mobility in future The pandemic has taught us the essence of self-consciousness in every possible aspect. Hence, it is a call for the government to seek competitive, diverse and climate conscious mobility solutions and a progressive India for its workforce, organizations (OEMs) and consumers. There is a significant push,” said Venu Srinivasan, President, TVS Motor Company.
Welcoming the PLI scheme, Hero Electric’s Managing Director Naveen Munjal said that it will both propel the EV industry and encourage the adoption of clean technology.
Commenting on the announcement, Naveen Munjal, MD, Hero Electric, said, “The recent announcements by the Government of India in the last few months have helped take the EV industry to its next level. With the amendments and additional revisions to FAME II earlier. The reduction in EV prices by various states has been a complete game changer. With this announcement of allocating a total of ₹ 26,000 crore to encourage and promote the adoption of clean mobility and technologies, the sector here Other incentives on manufacturing auto components that help make transportation cleaner outlay and transportation for OEM manufacturers will encourage investment and drive localization. This will help reduce the cost of manufacturing Which will benefit the consumer, industry and the environment. Hero Electric supports the government initiative and looks forward to leading the new phase of electric mobility in the years to come.”
The amount of fresh investment required for two wheeler manufacturers to take advantage of the PLI scheme will be ₹1,000 crore.
“We greatly appreciate our government for approving the PLI scheme for EVs and hydrogen fuel cell vehicles as it will encourage the auto industry to show more effective results. It will also help develop capacity and infrastructure in the EV industry. Will act as a catalyst and drive rapid EV adoption in India through high quality products at affordable prices for the customers.Such initiatives will shift from traditional fossil fuel-based automobile transport systems to eco-friendly, clean, sustainable and Will help in the transitional process of shifting to more efficient EV based systems.We look forward to such initiatives as it will attract more potential investors as well as existing industry stalwarts,” said Jitendra Sharma, MD & Founder, Okinawa Autotech. will help it flourish.
The objective of the scheme is to enhance India’s manufacturing capabilities and promote the emerging industry of electric vehicles. PLI scheme is going to encourage our Indian manufacturers to expand their business. The thrust for a clean environment and sustainable mobility will help us increase our goals by a higher percentage and expand operations in global markets. Yatin Gupte, Chairman and Managing Director, WardWizard Innovation and Mobility Limited said, this move will further strengthen the segment with the use of advanced technology and strengthening of infrastructure.
For electric two-wheeler start-ups, the amount of fresh investment required to avail the PLI scheme would be ₹1,000 crore, and for OEMs, they should have a minimum revenue of ₹10,000 crore.
The amount of fresh investment required for two wheeler manufacturers to take advantage of the scheme will be ₹1,000 crore. And for automobile original equipment manufacturers (OEMs) to avail the scheme, they must have a revenue of at least ₹10,000 crore and make fresh investments of ₹2,000 crore over a period of five years to benefit from the scheme. Auto component manufacturers must have a global net worth of ₹1,000 crore and a clear business plan to invest in advanced automotive technologies to be eligible for this scheme. Analysts say this is a win-win situation and will also help reduce costs.
“Yes, I think in the current market scenario it will help the two wheeler and three wheeler segment including existing OEMs to a great extent as they are also into manufacturing EVs. The plan focusing on OEMs and component manufacturers will also benefit component manufacturers. The focus on advanced automotive technology. Apart from stimulating growth, it will also help in reducing costs to be competitive in the global market,” said V Sridhar of Grant Thornton.
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For now, the PLI scheme is focused on emerging technologies, especially those related to the EV sector. A total of 22 components including flex fuel kits, hydrogen fuel cells, hybrid energy storage systems and parts of electric vehicles including charging ports, drive trains, electric vacuum pumps and electric compressors are covered under the Auto Components PLI scheme.
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