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Nod to Rs 26, 000 crore incentive for auto sector under PLI Scheme

Of the total amount, Rs 25,938 crore has been set aside for the auto sector, while Rs 120 crore will be offered to encourage production of drones and their parts. 

Published: 16th September 2021 03:18 AM  |   Last Updated: 16th September 2021 10:00 AM   |  A+A-

EV, electric car, electric vehicles

Representational Image. (File Photo)

Express News Service

NEW DELHI:  The Union Cabinet on Wednesday approved the Production Linked Incentive (PLI) scheme for the auto sector to promote advance automotive technologies, including clean energy vehicles, with incentives worth Rs 26,058 crore to be provided over a five-year period commencing FY23.

Of the total amount, Rs 25,938 crore has been set aside for the auto sector, while Rs 120 crore will be offered to encourage production of drones and their parts. 

Last year, the government had announced the scheme for the sector with an outlay of  Rs 57,043 crore, for a period of five years.

However, it slashed the scheme outlay by over 50% to shift focus on green mobility. The scheme does not have much benefit for conventional automotive manufacturing, a segment which is reeling under prolonged slowdown. 

“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, meets all the requirements of the electric vehicle ecosystem in India,” said Minister of Information and Broadcasting Anurag Thakur while explaining why the scheme for the sector was scaled down.

The government believes that the auto sector could attract fresh investments of over Rs 42,500 crore in five years and incremental production of over Rs 2.3 lakh crore with the introduction of the PLI scheme.

This estimation comes days after US automaker Ford closed its manufacturing unit in Indian citing poor sales and losses to the tune of $2billion.

However, it also comes at a time when conventional OEMs such as Tata Motors, TVS and Hero MotoCorp have announced aggressive foray into EV space. Sunjay Kapur, President of ACMA, said, “With global economies de-risking their supply chains, the PLI will aid India in developing into an attractive alternative source of high-end auto components.”

Rs 120 crore to encourage production of drones

Of the total amount, Rs 25,938 crore has been set aside for the auto sector, while Rs 120 crore will be offered to encourage production of drones and their parts. 



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