PLI scheme for auto will enable India become a part of global value chain: Industry

The Production Linked Incentive Scheme (PLI) approved Wednesday by the Centre for automobiles and ancillaries will help India enhance its competitiveness and become a part of the global value chain, top industry stakeholders told ET.The Department of Heavy Industries (DHI), the implementing ministry for the plan, is expected to shortly detail the eligibility criteria to identify ‘scalable champions’ on the metrics of turnover, exports, and growth history. Companies meeting the criteria will be eligible for incentives intended to boost local factory output and exports, said a senior industry executive.“The industry was eagerly awaiting this scheme to increase its competitiveness and take the growth of the sector to the next level,” said Kenichi Ayukawa, President of the Society of Indian Automobile Manufacturers (SIAM). “We look forward to the details of the scheme that would be rolled out by the Ministry of Heavy Industries & Public Enterprises.”To expand presence globally, automakers in the local market have been working at doubling exports in the next five years. Although the PLI details are yet to be published, industry insiders expect the incentives would help make manufacturing vehicles in India more competitive and scale up exports.Automakers exported 4.77 million vehicles in FY20.“The announcement of the approval of the PLI scheme for the auto and auto component sector is indeed a very welcome step to make the industry ‘Atmanirbhar’ and globally competitive,” said Deepak Jain, President, Automotive Component Manufacturers Association (ACMA). “We are hopeful that the outlay announced will encourage the industry to become net-exporters and help reduce import dependence. We eagerly await the detailed contours of the scheme for the auto and auto component sectors.”India exported auto components valued at $14.5 billion in the last financial year. Imports last fiscal also declined 11.4% to $15.4 billion. Jain added that while the auto component industry exports over 25% of its production, the industry aims to capture a significant proportion of the global trade.“This will also improve exports and will make better economies of scale,” said Vinkesh Gulati, President, Federation of Automobile Dealers’ Association (FADA). “With increasing auto production and the government giving incentives, I am sure that our principals will trickle down the benefits to the end customers. This will, therefore, help in demand generation.”For the record, India Wednesday approved a financial outlay of Rs 145,980 crore for enhancing manufacturing capabilities and exports in 10 identified sectors. The highest allocation – amounting to 39% of the overall outlay – has been made to the auto and auto component sectors.79182339“The automotive industry is a major economic contributor in India. The PLI scheme will make the Indian automotive industry more competitive and will enhance globalization of the Indian automotive sector,” the government said in a statement.An additional Rs 18,100 crore has been earmarked under the scheme for companies engaged in manufacturing advance chemistry cell (ACC) battery. The proposal will be formulated by Niti Aayog and Department of Heavy Industries.“ACC battery manufacturing represents one of the largest economic opportunities… for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy,” said the federal government statement. “The PLI scheme for ACC battery will incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country.”The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet.
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