The Union Cabinet on Wednesday approved a revised Rs 25,938 crore production linked incentive (PLI) scheme for auto and auto-components industries to enhance the domestic manufacturing capabilities. Last year, the government had announced a scheme for the sector with an outlay of Rs 57,043 crore, earmarked for five years.
Briefing the media about the decision, Union Minister Anurag Thakur said that the scheme for the automobile 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. The government also approved a Rs 120 crore PLI scheme for the drone industry.
"The government has approved the PLI scheme for automobile industry and drone industry with a budgetary outlay of Rs 26,058 crore," Thakur said. The PLI scheme will incentivize the emergence of advanced automotive technologies' global supply chain in India. Incentives worth Rs 26,058 crore will be provided to industry over five years.
According to Citi the change in the PLI scheme accentuates the government's focus on electrification of vehicles. Although it is quite disappointing for companies planning capacity expansion in the internal combustion engine vehicles. It could result in existing OEMs further investing in electric vehicles. Also, Citi expects the global electric vehicle or OEM part makers to invest in India eventually.
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Antique Broking says that faster transition from ICE to electric vehicles is a negative for traditional OEMs. They may not be able to catch up to speed, however in terms of the listed players, Tata Motors has the most credible plans to grow their EV sales amongst car makers as in any case they have leading market share in the passenger vehicle electric vehicle space.
Now in the auto components pace Bosch, Wabco, Sona Comstar, are the biggest beneficiaries.