The Indian automotive sector invested Rs 14,043 crore till March end under the government’s production-linked incentive (PLI) scheme for automobile and auto components, according to the Economic Survey tabled in the parliament on Monday ahead of the Union Budget tomorrow.
The government launched the Rs 25,938 crore output-linked incentive to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain. The total proposed investment under the scheme is estimated at Rs 67,690 crore.
Initially, the incentives were applicable on determined sales value from the financial year 2022-23 for five consecutive financial years till 2026-27. However, the scheme was later amended to extend the tenure by one year to March 31, 2028.
The scheme has two components – the Champion OEM incentive scheme for battery electric and hydrogen fuel cell vehicles in all segments, and the component champion incentive scheme for hi-tech and hi-value components.
The government has approved 18 companies including Maruti Suzuki, Toyota Kirloskar, Tata Motors, Hyundai Motor India, Kia India, Mahindra & Mahindra, Piaggio, Eicher, Hero MotoCorp, Bajaj Auto and Ola Electric, under the Champion OEM category.
Under the Component Champion category, 67 companies, including Sona BLW Precision, Delphi-TVS Technologies, Bharat Forge, Bosch, Dana Ananda India, Lumax Auto, Minda Corp, Aptiv Components, Maruti Suzuki, Ceat, Hero Cycles, got approval.
The incentives are given for the production of products with a minimum domestic value addition of 50%. The total incentive per an entire group company is capped at Rs 6,485 crore.
The scheme also looks to overcome cost disabilities, create economies of scale, generate employment and build a robust supply chain in areas of advanced automotive technology products and facilitate the industry to move up the value chain into higher value-added products.
“Applicants have proposed employment generation of 1.48 lakh, against which 28,884 of employment has been generated till 31/03/2024,” the Economic Survey said.
Meanwhile, the survey noted that the growth in the value of domestic production and consumption of automotive parts moderated between 2019-20 and 2022-23, compared to the five years before that.
The pandemic had a considerable impact on the automobile sector, weakening the demand for automotive parts and pace of expansion. “The production of auto components depends on the dynamics of the domestic and export markets. The auto components sector closely follows the trends in automobile production,” the survey noted.
Also read: Toyota Kirloskar Auto Parts qualifies for incentive under PLI scheme
Also read: Budget 2024: Govt allocates Rs 3,500 crore for PLI Auto, Components scheme in FY25