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Auto PLI scheme covers entire gamut of innovations in sector: SKF India

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The PLI scheme for the auto sector is aimed at steering the industry towards greener vehicles with companies set to receive incentives for incremental sales of advanced technologies. To discuss the impact, CNBC-TV18 spoke to two auto ancillary players Sunil Bohra, Group CFO of Minda Industries and Manish Bhatnagar, MD of SKF India.

The Union Cabinet, on Wednesday, approved a revised Rs 25,938 crore production linked incentive (PLI) scheme for auto, auto-components and drone industries to enhance the domestic manufacturing capabilities. Last year, the government had announced a scheme for the automobile and auto components sector with an outlay of Rs 57,043 crore, earmarked for five years.
The PLI scheme for the auto sector is aimed at steering the industry towards greener vehicles, with the companies getting ready to receive incentives for incremental sales of advanced technologies. To discuss the impact, CNBC-TV18 spoke to two auto ancillary players- Manish Bhatnagar, MD of SKF India, and Sunil Bohra, group CFO of Minda Industries.
Bhatnagar said, “It is extremely futuristic, very innovative, and certainly way beyond what I thought they will announce. I am extremely pleased to see and hear what I heard yesterday evening. Just to clarify, it is more than just green technologies, it is ofcourse electric vehicles, hydrogen fuel cells. It is also advanced technologies in traditional combustion engines. So, it kind of covers the entire gamut of innovations, that is clean energy and legacy energy.”
On electric vehicles, he said, “We have to think of electric vehicles as no different than the electricity we use in our homes. So it is a combination of consumption in our homes. But the full value chain also includes generation and transmission. If you recall, in June, the government announced FAME subsidies that certainly stimulated demand for electric two-wheelers and the PLI now seeks to address the generation or the production side. What I think we need to also see is the in-between link of transmission, so the electric charging infrastructure, I am hoping to see announcements on that front because that will complete the entire value chain, from production, to charging infrastructure to consumption.”
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On green energy, Bhatnagar said, “It is skewed towards green energy and it has to be. I mean, if you are looking at futuristic and innovative modes of transportation, we have to understand that is the future. But having said that, we are not going to convert all legacy engines to electric engines overnight. So, there is a transition and a phased approach here. So, the government has announced advanced technologies, even legacy engines can be made cleaner and greener.”
Meanwhile, Bohra said, “The scheme as we all know has undergone significant changes compared to when it was first conceived or announced last year, in November-December. That time the entire focus was more toward exports, toward making India a production hub, a world factory etc. It is a transition from there to a more technology-oriented scheme, which is incentivizing EV, hydrogen fuel cell, etc., and there might be some other components as well. So definitely, it is a positive step. I won’t call it a disappointment. But yes, we could have actually capitalised on the opportunity of China plus one strategy, which I think everybody is working on. We are still waiting as to what all components, what categories of components, will get covered as part of scheme. We have not yet got this list, which was announced yesterday.”
He added, “So for OEMs, the only challenge is going to be that for any new component you get into now, you have to invest and maybe wait for a year or two before you actually start getting the benefit for the newer production. Yes, whatever you have conceptualised till now, you will benefit, but for the new investment, yes, it will be a couple of years where you have to wait.”
For full interview, watch the accompanying video.
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