Union Cabinet approves PLI Scheme for Automobile & Drone Industries

The Union Cabinet today approved the Production-linked Incentive (PLI) Scheme for Automobile and Drone Industries with a budgetary outlay of Rs 26,058 crore. The PLI scheme for the auto sector will incentivize high-value Advanced Automotive Technology vehicles and products. It will herald a new age in higher technology, more efficient and green automotive manufacturing.

Briefing reporters after the cabinet meeting in New Delhi, Information and Broadcasting Minister Anurag Thakur said, a sum of Rs 25,938 crore for the auto sector and Rs 120 crore have been allocated for the Drone Industry. He said this will incentivize the emergence of Advanced automotive technologies global supply chain in the country.

Mr Thakur said, the scheme will also bring fresh investments of over Rs 47,500 crore in five years and create additional employment opportunities for over 7.60 lakh people. He said, this will enhance India's manufacturing capabilities and enable the country to leapfrog to environmentally cleaner electric vehicles and hydrogen fuel cell vehicles.

PLI Scheme for Automobile Industry and Drone Industry is part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore. With the announcement of PLI Schemes for 13 sectors, the minimum additional production in India is expected to be around Rs 37.5 lakh crore over 5 years and the minimum expected additional employment over 5 years is nearly 1 crore.

The PLI Scheme for the auto sector envisages overcoming the cost disabilities to the industry for the manufacture of Advanced Automotive Technology products in India. The incentive structure will encourage the industry to make fresh investments for an indigenous global supply chain of Advanced Automotive Technology products. It is estimated that over five years, the PLI Scheme for Automobile and Auto Components Industry will lead to a fresh investment of over Rs 42,500 crore, incremental production of over Rs 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs. Further, this will increase India's share in the global automotive trade.

The PLI Scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in the automobile or auto component manufacturing business. The scheme has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The Champion OEM Incentive scheme is a 'sales value linked' scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments. The Component Champion Incentive scheme is a 'sales value linked' scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors etc.

This PLI Scheme for the automotive sector along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) (Rs 18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (Rs 10,000 crore) will enable India to leapfrog from traditional fossil fuel-based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient Electric Vehicles (EV) based system.

The PLI Scheme for the Drones and Drone components industry addresses the strategic, tactical and operational uses of this revolutionary technology. A product-specific PLI scheme for drones with clear revenue targets and a focus on domestic value addition is key to building capacity and making these key drivers of India's growth strategy. The PLI for the Drones and Drone components industry, will over three years, lead to investments worth Rs 5,000 Crore, an increase in eligible sales of Rs 1,500 crore and create additional employment of about 10,000 jobs.