Govt may consider auto PLI applications from firms with Chinese investments: Report

The government is reportedly likely to consider applications under the production-linked incentive (PLI) scheme from automobile and auto component companies with Chinese investments, officials said. This could allow benefits for ventures including JSW MG Motor India and two Tata AutoComp Systems partnerships.

According to a report in The Economic Times, a senior official stated that existing PLI applications with foreign direct investment (FDI) approvals will be considered. However, no new window for fresh applications under the PLI scheme is being opened, it said.

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JSW MG Motor India, which sells MG-branded passenger vehicles in India, is a joint venture between JSW Group and China’s SAIC Motor. Tata AutoComp Systems has two ventures with Chinese companies. TACO Prestolite, its partnership with Prestolite Electric Beijing, designs and manufactures advanced electric drivetrains and traction motors for electric vehicles. TACO Air International, its venture with Air International Shanghai Co, manufactures automotive air-conditioning systems.

The decision comes as India-China relations have improved after years of tensions following the Galwan Valley clashes in June 2020. Earlier this month, Chinese President Xi Jinping visited India for the BRICS Summit and held a bilateral meeting with Prime Minister Narendra Modi.

The two countries have increased ministerial and official-level exchanges and agreed to resume direct flights. India has introduced new guidelines to expedite approvals for FDI proposals involving Chinese investments.

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Pending approvals for Chinese FDI proposals had delayed the processing of some PLI applications. A few applications, including one from Dixon Technologies' venture with a Chinese partner for electronic components, have already received approval for PLI benefits, the official added.

The auto PLI scheme was approved in September 2021 with a budgetary outlay of ₹25,938 crore. Incentives are linked to incremental production, investment and domestic value addition, among other criteria.