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Auto PLI scheme explained: What it means, who will benefit from it and impact

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The PLI scheme for the auto sector is divided into two parts-- Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

Auto PLI scheme explained: What it means, who will benefit from it and impact
The Centre has cleared the production linked incentive (PLI) scheme for the auto, auto component, and drone industries on Wednesday to push manufacturing of electric vehicles and hydrogen fuel vehicles.
As part of the Rs 26,058-crore PLI scheme, a sum of Rs 25,929 crore has been earmarked for the auto industry and incentives up to 18 percent will be offered.
What is the auto PLI scheme?
The PLI scheme for the auto sector is divided into two parts-- Champion OEM Incentive Scheme and Component Champion Incentive Scheme.
The Champion OEM Incentive Scheme is for Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments.
The Component Champion Incentive Scheme is for Advanced Automotive Technology components of vehicles, Completely Knocked Down (SKD) kits, vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles, and tractors.
The scheme is aimed at giving a push to advanced automotive technologies.
Impact of auto PLI scheme
Union Minister of Information and Broadcasting, Anurag Thakur said that the PLI scheme for the automobile and auto components industry will lead to a 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.
According to the government, a cumulative effect of the PLI scheme for the auto sector, PLI for Advanced Chemistry Cell (worth Rs 18,100 crore), and Faster Adoption of Manufacturing of Electric Vehicles (FAME) scheme (worth Rs 10,000 crore) will give a big push to the manufacturing of electric vehicles in India.
“We are leapfrogging (technology) to environmentally cleaner vehicles. The new PLI scheme will work hand-in-hand with the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) Phase II scheme and PLI scheme for advanced cells and therefore meet all the requirements of the electric vehicle ecosystem in India,” explained Thakur.
The scheme will support both greenfield (new companies being set up) and brownfield (companies that are already in operation) investments.
Meanwhile, the shares of auto component makers rallied after the Cabinet approved the incentive scheme.
Eligibility criteria
Automobile companies that invest Rs 2,000 crore for four-wheelers and Rs 1,000 crore for two-wheelers over five years will be eligible.
Automobile original equipment manufacturers must have a minimum revenue of Rs 10,000 crore and invest Rs 2,000 crore over five years. For two-wheeler companies, the investment should be a minimum of Rs 1,000 crore. For auto component makers, the criteria to get PLI benefits are -- a minimum revenue of Rs 500 crore and Rs 150 crore of fixed asset investment.
Non-automotive investors will be eligible to get benefits from the scheme if they have a global net worth of Rs 1,000 crore and a clear business plan for investment in advanced automotive technologies.
Under the PLI scheme for auto components, the government will incentivise the manufacturing of electronic power steering systems, automatic transmission assembly, sensors, sunroofs, supercapacitors, adaptive front lighting, tyre pressure monitoring system, automatic braking, tyre pressure monitoring system, and collision warning system. A total of 22 components have been brought under the incentivised scheme including specialised parts for electric vehicles like high-voltage connectors and cables, AC and DC charging inlet, and outlet ports.
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