The Manufacturing Incentive Scheme (PLI) for autos and auto parts has attracted total investment of Rs 74,850 crore, exceeding the government’s target estimate of Rs 42,500 crore.

A total of 95 companies including Maruti Suzuki, Hero MotoCorp, Ashok Leyland, Bajaj Auto and Bosch have pledged to invest Rs 74,850 crore to produce cars and components under the Production Linked Incentives (PLI) program of Narendra Modi’s government. The proposed investment over a five-year period is 75% more than the government’s target, the Ministry of Heavy Industry said on Tuesday. Under the scheme, the approved companies will receive financial incentives of up to 18% from the government when they produce in India.

In total, the government had pursued an investment estimate of Rs 42,500 crore for both auto and auto parts manufacturers under the PLI scheme – the Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The government said it has approved a proposed investment of Rs 29,834 crore from applicants under the Component Champion Incentive Scheme, exceeding the target of Rs 25,938 crore.

Up to 18% financial incentives for car and auto parts manufacturers

Suggested incentives for component manufacturers range from 8% to 13% of the determined sales value, while those for OEMs range from 13% to 18%. Premiums will be awarded for the sale of advanced automotive technology products (both vehicles and components) manufactured in India for five years from April 1, 2022. In the budget, the government has earmarked an expenditure of Rs 25,938 crore for auto and auto parts manufacturers. under this arrangement.

“The overwhelming response shows that the industry has placed its confidence in India’s tremendous progress as a world-class manufacturing destination… India is sure to make a huge leap towards a cleaner, more sustainable, advanced and efficient electric vehicle-based system,” Secretary of the Union Heavy Industries, Dr. Mahendra Nath Pandey said in the statement. EV makers, including Ola Electric and Hop Electric, have also been approved under the scheme.

PLI Autos: both domestic and foreign companies approved such as Maruti, Bosch

Automakers and auto parts manufacturers like Maruti Suzuki, Bharat Forge Limited, Bosch Limited and Hero Cycles Limited have been given the thumbs up from the government under the component manufacturing scheme. While new non-automotive companies like Bharat Heavy Electricals Limited and Ceat Limited have also been zeroed out by the government under this scheme.

Earlier in February, the government announced the list of 20 OEMs selected under the Champion OEM Incentive Scheme. Approved companies included Suzuki Motor Gujarat, Tata Motors, Hyundai, Mahindra & Mahindra, HeroMotoCorp and Ola Electric.

Make in India: Creating more jobs, effective supply chain

The scheme is part of the government’s efforts to obliterate “cost constraints” and create economies of scale for advanced automotive technology products in India. It will be in effect from fiscal 2023, while the incentives will be paid out for five years from fiscal 2024. The PLI scheme, under which 13 sectors have been approved by the central government, aims to create a robust supply chain for the manufacturing industry. Apart from Indian companies, approved applicants include groups from countries like Japan, Germany, US, UK, Korea and France.

PLI was announced after the COVID-19 pandemic to make India self-reliant and generate employment. The scheme has also been mentioned in the World Bank’s Global Economic Prospects report, according to which India’s growth could be boosted with the help of this scheme. According to a report by BNP Paribas, the PLI scheme is expected to add about 1.7% to India’s GDP.

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