IGI Logo

GOI approves PLI scheme for auto industry – augurs well for electrification

Government of India has approved the Production Linked Incentive (PLI) Scheme for Auto Industry. Total incentive to be provided over 5 years (starting from FY23) has been reduced to INR 261bn vs. INR 570bn announced earlier. The reduction in incentive is likely due to the exclusion of petrol, diesel and CNG vehicles.

We believe that the incentive scheme is directed towards promotion of advanced automotive technology and may also incentivise global EV OEMs to set-up manufacturing base in India. This scheme along with PLI for Advanced Chemistry Cells Battery Storage (INR 180bn incentive) and FAME II (INR 100bn incentive) provides a total incentive of INR 541bn towards electrification initiatives. The scheme augurs well for 2W and PV OEMs which are just entering the EV space.

Though exclusion of hybrid and conventional powertrain vehicles is a disappointment, OEMs may indirectly benefit from higher localisation as incentives to component suppliers may make domestic sourcing competitive. We expect c.10 OEMs to be eligible for the scheme. Escorts, Force Motors, Atul Auto may not qualify owing to the the revenue eligibility criteria. Though we await further details of auto compoments eligible under the scheme, based on revenue and investment criteria, 60+ auto component companies are eligible for the PLI scheme.

* Products eligible under the scheme:

* Champion OEM Incentive Scheme is applicable on Battery Electric Vehicles (BEVs) and Hydrogen Fuel Cell Vehicles of all segments.

* Component Champion Incentive Scheme applicable on advanced automotive technology components of vehicles (as per a news article, 22 components are included which also includes conventional vehicle components – details awaited).

* Revenue and investment eligibility (most likely on FY20 basis):

* OEMs with global group revenue of INR 100bn+ and investment of INR 30bn+.

* Auto ancillary with global group revenue of INR 5bn+ and investment of INR 1.5bn+.

* New investor need to have a net worth of INR 10bn+.

* Minimum new domestic investment required over 5 years to be eligible for incentive:

* Selected OEMs - INR 20bn

* Selected 2/3W OEMs – INR 10bn

* Selected Auto Component suppliers – INR 2.5bn

* New investors in auto components – INR 5bn.

* Quantum of incentive:

* Additionally, 2% incremental incentive is provided if cumulative incremental revenue over 5 years exceed INR 100bn for auto OEMs and INR 12.5bn for auto ancillary.

* BEV and hydrogen fuel vehicle component supplier will get addition 5% incentive.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.jmfl.com/disclaimer

CIN Number : L67120MH1986PLC038784

Above views are of the author and not of the website kindly read disclaimer