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Automakers hail PLI scheme; say it’ll enthuse players to invest more in India growth story

Automakers hail PLI scheme; say it’ll enthuse players to invest more in India growth story

The govt, with an eye to promote the green vehicle story, is looking to make the industry more future-ready. Players and industry trackers think this will be the beginning of big-ticket investments flowing into the sector

The first part by way of incentives is done and all eyes will be on how it all plays out. Photo: Reuters The first part by way of incentives is done and all eyes will be on how it all plays out. Photo: Reuters

The automotive industry has had more than one reason to be happy with the announcement of the production linked incentive (PLI) scheme, which adds up to over Rs 26,000 crore. In a series of measures, the government, with an eye to promote the green vehicle story, is looking to make the industry more future-ready. Players and industry trackers think this will be the beginning of big-ticket investments flowing into the sector.

Shailesh Chandra, President (Passenger Vehicle Business Unit), Tata Motors, maintains the government has taken a holistic approach. “The scheme promotes manufacturing, export of electric vehicles and those running on hydrogen fuel cells,” he says, before areas such as supporting infrastructure and new technology auto parts will also benefit. In every way, the incentives are viewed as coming at a time when the industry needs that big push to get back on the growth path.

Suraj Ghosh, Associate Director (Powertrain & Compliance Forecasts), South Asia, IHS Markit, thinks the measures are positive for the sector and will enthuse players to invest more in the India growth story. “With the PLI scheme, one can expect the dependence on sourcing from outside India to reduce,” he says. Citing the example of the automatic transmission, Ghosh explains it is largely imported today and “it could lead to global suppliers setting up shop locally.”

Also read: Cabinet approves Rs 26,058 cr PLI scheme for auto, drone sectors

 

Understandably, anyone in the business of electric vehicles (EVs) anticipates fortunes changing. Naveen Munjal, MD, Hero Electric says the earlier push through amendments to FAME (Faster Adoption of Manufacturing of Electric Vehicles) II and added revisions “have been absolute game-changers in bringing down the prices of EVs.” To his mind, the PLI outlay will encourage the adoption of cleaner mobility and technologies. “The sector is poised to grow exponentially from here on. The outlay for OEM makers and other incentives on manufacturing auto components will encourage investments and further drive localisation. This will bring down manufacturing costs,” he states.

Ghosh welcomes the moves on green vehicles, though the focus on internal combustion engines remains. “The objective appears to be a smooth transition and that is a good thing to do.” The overall value of PLI is Rs 26,058 crore, which he thinks may look small compared to what one sees in China. “But, in the context of a new scheme being rolled out, this is significant.”

With the job story having looked challenging for a while, those like Tata Motor’s Chandra calls the scheme “progressive which will help in accelerating the transition to smart environment-friendly sustainable mobility solutions.” In his opinion, more jobs will be accompanied by component manufacturers being better placed to plan their future roadmap and achieve scale. The first part by way of incentives is done and all eyes will be on how it all plays out.

Also read: From moratorium on AGR dues to 100% FDI, govt approves bold reforms for telecom sector