The Indian government has given the green light to the “Production Linked Incentive Scheme for Automobile and Auto Components Industry.” This ambitious initiative aims to rev up India’s manufacturing capabilities for cutting-edge automotive products. By providing financial incentives, the scheme hopes to attract investments and strengthen the country’s automotive manufacturing value chain.
Need for Speed
The Prime Objectives of this scheme are multifold. Firstly, it aims to overcome the cost disabilities that Indian manufacturers face in producing advanced automotive technology products. Secondly, it seeks to create economies of scale, enabling our homegrown companies to compete globally. Thirdly, it endeavors to build a robust supply chain for high-tech auto components, reducing our reliance on imports.
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Moreover, this scheme promises to generate employment opportunities for skilled workers in the automotive sector. Perhaps most crucially, it will facilitate the Indian automobile industry’s transition to higher value-added products, propelling us up the value chain.
Two Gears, One Engine
The Production Linked Incentive Scheme for Automobile and Auto Components Industry consists of two primary components, both focused on incentivizing the incremental sales of advanced automotive technology products.
Champion OEM
The first component, the “Champion OEM Incentive Scheme,” is designed to address the cost disabilities that original equipment manufacturers (OEMs) face in producing advanced automotive technology vehicles. This “sales value linked” scheme applies to a wide range of vehicles, including battery electric vehicles (BEVs), hydrogen fuel cell vehicles (FCEVs), two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, tractors, and even automobiles meant for military use.
Component Champion
The second component, the “Component Champion Incentive Scheme,” aims to identify and incentivize auto component champions that can achieve global scale and become “Automotive Champions” for the auto-component manufacturing sector related to advanced automotive technology.
Eligible Products
So, what qualifies as an “eligible product” under this scheme? The criteria are straightforward:
- Pre-approved advanced automotive technology vehicles and pre-approved advanced automotive technology components for all vehicles, including CKD/SKD kits and vehicle aggregates for two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, and tractors, including those meant for military use.
- The list of advanced automotive technology vehicles and components will be prescribed and can be amended by the Ministry of Heavy Industries (MHI) from time to time, depending on technological developments.
This forward-looking approach ensures that the scheme remains flexible and can adapt to emerging innovations in the automotive sector.
With this Production Linked Incentive Scheme, the Indian government is paving the way for a future where our homegrown automotive industry can compete on a global stage, embracing cutting-edge technologies and driving sustainable growth.
