Automobile and auto parts makers in India invested a total Rs 13,000 crore in the past year for manufacturing green vehicles and related parts under the government’s Production Linked Incentive (PLI) scheme.
Senior government officials told ET eight automakers and parts suppliers–Mahindra & Mahindra, Tata Motors, Bajaj Auto, Ola Electric, Toyota Kirloskar Auto Parts, TVS Motor Company, Sona BLW Precision Forgings, Delphi TVS Technologies have invested and got approval under the PLI scheme.
The government expects to achieve its target of attracting investments worth Rs 42,500 crore in the next 2-3 years, ahead of the initial timeline of five years.
“We have already seen investments of Rs 13,000 crore from auto and component makers. The industry has received the scheme well; there are a lot of projects underway to deepen localisation, also of advanced auto parts,” one of the officials cited above said, adding investments envisaged from the sector over the five-year period will exceed the initial estimate.
The government had approved an outlay of Rs 25,938 crore under the PLI scheme to support the local automotive industry to make the transition to eco-friendly technologies. The scheme has been designed to encourage development and indigenous production of electric vehicles, hydrogen fuel cell vehicles as well as advanced auto technologies aimed at cutting fuel consumption and carbon emissions in the mobility sector.
The scheme extends financial incentives of up to 18% to boost domestic manufacturing of advanced automotive technology products. The incentive structure is aimed at encouraging the industry for making fresh investments in indigenous supply chains, deepening localisation of advanced automotive technology products by overcoming cost disabilities and creating economies of scale. Vinod Aggarwal, president of industry body Society of Indian Automobile Manufacturers (SIAM) said recently localisation programmes started by the industry, along with the Rs 25,000 crore PLI scheme to address cost disabilities have started showing results. “Despite the sharp rise in customer demand for feature-rich vehicles across segments, the share of imports in total revenues of the automotive industry has declined by about 4% between FY20 and FY22,” Aggarwal said. “Industry turnover in these two years grew by 27.9%, while the growth in imports was only 8.7%, indicating that efforts towards localisation have started yielding results.”
It is estimated that in the five-year period, the PLI scheme will lead to incremental production of over Rs 2.3 lakh crore, creating more than 750,000 jobs. Further, this will boost India’s share in global automotive trade.