auto | IST

Exclusive: Auto PLI scheme likely to be slashed more than 50%; additional 5% incentive for EVs, hydrogen fuel cell vehicles

The outlay for the Production-Linked Incentive (PLI) scheme for the automobile sector may is likely to be reduced to Rs 26,000 crore as against Rs 57,042 crore announced earlier, sources told CNBC-TV18.

With an objective to make the automobile sector competitive and develop component champions in India, the Narendra Modi government announced Rs 57,043 crore outlay for the Production Linked Incentive (PLI) scheme in November 2020.
CNBC-TV18 learns that the government has now slashed the outlay to Rs 26,000 crore and is likely to consider for cabinet approval next week. Sources also added that the outlay could be increased further depending on the response to the scheme.
It is also learnt that incentive slabs for both original equipment manufacturers (OEMs) and auto component manufacturers, as well as new non-automotive investors, will be in the range of 8-10 percent on determined sales value.
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The new non-automotive investor will be the one who is not currently in the OEM or component business but intends to invest in the sector. For both OEMs and component manufacturers, there will be an additional incentive of 2 percent on the sales value of over Rs 10,000 crore over five years period. Similarly, an additional 2 percent incentive will be given for auto component manufacturers for sales value over Rs 1,250 crore over five years period.
The idea is also to bring in advanced automotive technology for the automobile and component sector under the PLI scheme. An additional incentive of 5 percent will be given to both manufacturers of OEMs and auto components for battery electric and hydrogen fuel cell-based manufacturing. The base year for calculation of incentive will be FY20 except for new non-automotive investors. The eligibility criteria will be dependent on front-loading of investments over the 5 years period to avail the incentives under the scheme.
Once approved, the government may look at inviting applications starting November this year. Beneficiaries under the scheme will be limited to 10 OEMs, 50 component makers, and five new non-automotive investors. Automobile manufacturing contributes 50 percent to India's manufacturing but auto components only contribute one percent of exports in the global trade.