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Centre ushers in PLI for auto sector, focus on EVs
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SME Times News Bureau | 15 Sep, 2021
The Centre on Wednesday approved a PLI scheme for the auto sector,
especially focusing on environment-friendly automobiles such as electric
vehicles (EVs).
The over Rs 25,000 crore scheme is likely to boost production of components as well as give a push to the sector.
In financial parlance, a PLI scheme provides incentives to the industry for boosting domestic production to lessen imports.
Earlier, an outlay of Rs 1.97 lakh crore was made for PLI scheme spanning 13 sectors in budget 2021-22.
As
per an official communique, the scheme for the auto sector envisages to
overcome the cost disabilities to the industry for manufacture of
"advanced automotive technology" products in India.
"The
incentive structure will encourage industry to make fresh investments
for indigenous global supply chain of 'Advanced Automotive Technology'
products," the communique said.
"It is estimated that over a
period of five years, the PLI Scheme for Automobile and Auto Components
Industry will lead to 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.
"Further this will increase India's share in global automotive trade."
According
to the communique, the scheme for auto sector is open to existing
automotive companies as well as new investors who are currently not in
automobile or auto component manufacturing business.
"The scheme
has two components viz 'Champion OEM Incentive Scheme' and 'Component
Champion Incentive Scheme'. The Champion OEM Incentive scheme is a sales
value linked scheme, applicable on Battery Electric Vehicles and
Hydrogen Fuel Cell Vehicles of all segments."
"The Component
Champion Incentive scheme is a sales value linked scheme, applicable on
Advanced Automotive Technology components of vehicles,
completely-knocked down (CKD) or semi-knocked down (SKD) kits, vehicle
aggregates of 2-wheelers, 3-wheelers, passenger vehicles, commercial
vehicles and tractors etc."
On its part, India Inc welcomed the move.
"As
a homegrown leading automotive brand in India, we at Tata Motors are
delighted to see the new PLI scheme announced today. The government has
taken a holistic approach to make India 'Aatmanirbhar', especially in
technology areas, that will be relevant and important in future," Tata
Motors Passenger Vehicle Business Unit President Shailesh Chandra said.
"The
scheme promotes manufacturing, export of electric vehicles and those
running on hydrogen fuel cells, their supporting infrastructure, as well
as new technology auto parts requiring advanced production techniques. A
progressive scheme which will help in accelerating transition to
smart, environment-friendly, sustainable mobility solutions."
ACMA
President Sunjay Kapur said: "Thrust on incentivising new age
technologies will facilitate creation of a state-of-the-art automotive
value chain in the country and give a much-needed impetus to
manufacturing of cutting edge automotive products in India."
"Further,
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."
EY India Tax Partner, Automotive sector Saurabh
Agarwal said: "The beneficiaries in the PLI scheme for auto sector are
likely to be 10 vehicle manufacturers, 50 auto-component manufactures,
and 5 new non-automotive investors planning to enter into the automotive
sector."
"With the limited budget of INR 26,000 crore approx.
likely the industry will see a tough competition with respect to award
of the PLI scheme."
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