The Union cabinet is set to clear PLI scheme for vehicles and components makers. The initial approved outlay of Rs 57,000 crore has been reduced to Rs 25,938 crore. This is because the scheme will only incentivize makers of electric and hydrogen fuel cell vehicles.
While the components PLI scheme also focuses on new technologies, parts of internal combustion engines have been included there.
Government sources say that the scheme has been modified with a focus on advanced automotive technologies after feedback from the Prime Minister’s Office. The government believes that India’s share in global automotive exports is less than 2 percent and therefore there is a need to promote advanced technologies like hydrogen and electric vehicles.
While the industry is keen to see the fine print and allocations for different players, there is disappointment over the exclusion of conventional internal combustion vehicles. What has come as a big surprise to some vehicle manufacturers, is the exclusion of CNG vehicles from the ambit of the scheme. “The scheme covers diesel parts in the components PLI scheme, but CNG technology has been left out. Does this indicate a U-turn on the government’s intention to promote CNG vehicles, which is a green fuel?”, said a senior industry executive requesting anonymity.
India is targeting 10000 CNG outlets in the next five years.
In line with the government’s push towards alternate fuels, EVs and hydrogen, the auto components PLI scheme includes flex-fuel kits, hydrogen fuel cell, hybrid, EV parts, IC engine components, ECUs and infotainment systems. There is also a big focus on vehicle safety products including collision warning systems, blind-spot detection, advanced emergency braking systems, sensors, cameras and driver monitoring systems.
The scheme is likely to be limited to 10 vehicle manufacturers, 50 auto component makers and 5 new non-automotive investors. Incentives to be based on sales value and 10 percent YoY growth on the same. FY2019-20 will be the base year and the scheme will be applicable from FY23.