Government extends PLI scheme for Auto sector

News Excerpt:

The Ministry of Heavy Industries announced the extension of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year with "partial amendments".

More about the news:

  • This decision was made after receiving the approval of the Empowered Group of Secretaries (EGoS), demonstrating the government's commitment to supporting the growth and competitiveness of the automotive industry in India.
  • The amendments aims to provide clarity and flexibility to the industry and will be applicable for a total of five consecutive financial years starting from 2023-24.

About the Scheme:

Objectives: 

  • To provide financial incentives to boost domestic manufacturing of Advanced Automotive Technology products.
  • Overcoming cost disabilities, creating economies of scale, and building a robust supply chain by promoting localisation in this area.
  • To generate employment in the country.
  • To facilitate the Automobile Industry to move up the value chain into higher value-added products by attracting more investments.

Key Amendments:

  • Extension of the incentive period: One notable amendment is the extension of the incentive period to a total of five consecutive financial years.
  • Longer timeframe: The extension provides a longer timeframe for companies to avail the benefits of the scheme and plan their investments accordingly.
  • Streamlined Process: The disbursement of the incentive will now take place in the following financial year, ensuring a more streamlined process and timely support to the industry.
  • Incentive outlay: The amendments also include changes to the table indicating the incentive outlay, with the total indicative incentive amounting to Rs 25,938 crore. This revised outlay reflects the government's continued commitment to supporting the automotive industry and driving its growth.
  • Threshold Requirement: To maintain a level playing field, the amendments introduce a threshold requirement for an increase in Determined Sales Value over the first year's threshold. If an approved company fails to meet this threshold, it will not receive any incentive for that year.
    • However, it will remain eligible for benefits in the next year if it meets the threshold calculated based on a 10% year-on-year growth over the first year's threshold. This provision encourages companies to make sustained investments and growth. 

Conclusion:

A cooperative strategy including frequent stakeholder consultations, streamlined procedures, and continuous support for technology adoption is essential to the PLI scheme's success for the automotive sector. Furthermore, encouraging an innovative culture, adopting sustainable practices, and taking into account the dynamics of the global market will enable beneficiaries to overcome obstacles and optimize the program's advantages, supporting the growth of the Indian automobile industry.

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