PLI scheme for auto sector

PLI scheme for auto sector

Part of: Prelims and GS -III – Economy 

Context The Union Cabinet has approved a Rs. 26,058 crore production-linked incentive (PLI) scheme to enhance manufacture of advanced technology and green vehicles, auto parts and drones.

Key takeaways 

• Benefits: It will attract Rs. 42,500 crore in fresh investment into the automobile and auto components industry over five years
  • It will help create more than 7.5 lakh jobs.
• The scheme has been devised for both existing automotive firms and new investors.
• The ‘sales value linked’ scheme includes a ‘champion OEM’ incentive applicable on battery electric vehicles and hydrogen fuel cell vehicles.
• A ‘component champion’ incentive is for advanced automotive technology components.

What is the PLI scheme?

• The Product Linked Incentive (PLI) scheme aimS to boost domestic manufacturing under the government’s Atmanirbhar Bharat initiative.
• It was introduced in March 2020 and is expected to result in a minimum production worth more than $500 billion in five years.
• The scheme provides incentives to companies for enhancing their domestic manufacturing apart from focusing on reducing import bills and improving the cost competitiveness of local goods. 
• PLI scheme offers incentives on incremental sales for products manufactured in India. 
• Eligibility criteria for businesses under the PLI scheme vary based on the sector approved under the scheme.
• Some of the sectors for which PLI scheme has been approved are:
  • Electronic or technology products 
  • Pharmaceuticals drugs 
  • Telecom & networking products 
  • Food Products 
  • High-efficiency solar PV modules

News source: TH