BMW India President commends PLI boost in interim budget

Hyderabad: In a landmark development, the Indian government has announced a substantial over seven-fold increase in the allocation of the automotive industry's Production-Linked Incentive (PLI) scheme for the fiscal year 2024-25. According to the interim budget unveiled by Finance Minister Nirmala Sitharaman on Thursday, the allocation for the PLI scheme has been raised to Rs 3,500 crore, up significantly from the revised estimate of Rs 483.77 crore in the current fiscal year. This move underscores the government's commitment to fostering growth and competitiveness within the automotive sector.

The Production Linked Incentive scheme PLI, aims to boost the manufacturing of Advanced Automotive Technology (AAT) products and encourage deep localization, thereby creating a robust supply chain in the automotive industry. The extended support for the PLI scheme comes on the heels of the Ministry of Heavy Industries' recent decision to prolong the tenure of the scheme for automobiles and auto components by an additional year. This means that the incentives will now be applicable for five consecutive financial years, starting from the financial year 2023-24.

The Union Cabinet had initially approved the PLI-Auto scheme on September 15, 2021, with a substantial budgetary outlay of Rs 25,938 crore for five years spanning from FY2022-23 to FY2026-27. The primary objectives of the scheme include overcoming cost disabilities, creating economies of scale, and building a robust supply chain for AAT products. It is anticipated to generate employment opportunities and facilitate the movement of the automobile industry up the value chain into higher value-added products.

Reacting to the government's announcement, Vikram Pawah, President of BMW Group India, expressed optimism about the future trajectory of the Indian automotive sector. He emphasized the positive impact that extended support for the PLI scheme would have on advancing India's automotive manufacturing and supply chain. In a statement, Pawah said, "The new announcements in Budget 2024 regarding the automotive industry will expand and strengthen the e-mobility ecosystem by boosting manufacturing and charging infrastructure."

Pawah also highlighted the potential benefits for Original Equipment Manufacturers (OEMs) and consumers. He noted that the increased focus on innovation, technology, and sustainability would ultimately benefit these key stakeholders in the automotive ecosystem. This endorsement from a prominent industry figure like Vikram Pawah underscores the positive sentiment within the sector regarding the government's commitment to fostering growth and innovation.

The PLI scheme's impact extends beyond financial incentives. It is designed to enhance India's manufacturing capabilities and exports in the automotive and automobile components sector. The scheme's architecture proposes financial incentives to boost domestic manufacturing of AAT products and attract investments in the automotive manufacturing value chain. Currently, 18 companies under the 'Champion OEM' category and 67 companies under the 'Component Champion' category have been approved under the PLI Auto Programme, with a total estimated investment of Rs 67,690 crores.

The government's substantial increase in allocation for the PLI scheme in the automotive sector, coupled with the extension of its tenure, signals a robust commitment to fostering growth and innovation. Vikram Pawah's positive reaction further emphasizes the potential for transformative changes within the Indian automotive landscape, as increased financial support is expected to drive advancements in technology, sustainability, and overall competitiveness. The automotive industry, with the backing of the PLI scheme, seems poised for a dynamic and promising future.