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    PLI Scheme to Benefit Domestic Auto, Parts Industries in Multiple Ways

    The recently announced production-linked incentive (PLI) scheme with an outlay of Rs 25,938 crore will benefit domestic auto and auto components sectors in multiple ways, credit rating agency Icra said in a report released on Tuesday.

    The scheme aims for a future-ready and globally competitive Indian auto sector, by fast-tracking investments in technology and components where India needs to leapfrog.

    Besides, it will increase localisation, accelerate investments towards a local EV ecosystem, and has the potential to make India an export hub in the global auto supply chain, Icra said in the report.

    The government had on September 19 approved the PLI scheme for the auto industry with an outlay of Rs 26,400 crore that has been slashed from the initial outlay of Rs 57,000 crore.

    The scheme will be effective from FY2023 for five years, and the base year for eligibility criteria would be FY2020.

    The PLI incentives are sales-linked and are expected to be in the range of 13-18 percent on determining sales values for OEMs and 8-13 percent on determining sales values for auto component manufacturers, according to Icra.

    An additional five percent is to be given for manufacturing components for battery electric vehicles and hydrogen fuel cell vehicles, as per the scheme, Icra said.

    The Ministry of Heavy Industries estimates that the scheme has the potential to bring fresh investments of over Rs 42,500 crore and result in incremental production of over Rs 2.3 lakh crore.

    Icra Assistant Vice-President and Sector Head Vinutaa S said, “The PLI scheme will increase localisation, accelerate investments towards a local EV ecosystem and has the potential to make India an export hub in the global auto supply chain.”

    Vinutaa added that it aims to promote an indigenous global supply chain of advanced automotive technology products which is low compared to that globally.

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