Auto industry sees incremental benefit

New Delhi: With the announcement of over Rs25,000 crores in the automobile segment via PLI scheme, auto associations believe that the increment will further strengthen OEMs andmanufacturers to make the country a stronger hub for electric mobility.

Speaking on the reported chip shortage, an essential component for the production andmanufacturing of EVs, Arun Goel, Secretary, Ministry of Heavy Industries, Govt of India, said that with the popularity of EV segment in India, the share of auto electricals and auto technology isincreasing, and many new non-automotive people are contributing to the auto sector.

Goel said that a break-up on the budgetary allocation of the newly announced investment has not been kept separately for OEMs and manufacturers. "We have intentionally not kept a separate category because during intimation there may be cost problems for the industry. This is one single outlet for all sub-components," Goel added.

On the scope of the investment benefitting the automobile industry, Goel said: "If you see the recent trends, many of the multinationals in the auto industry have already declared their future intentions. Indian automotive industry is closely integrated with global auto industry. The entire auto industry knows this that the disruption that is happening is across the globe. This PLI encourages the investors to look at India and when they look at this PLI along with other PLIs whichwe have announced, specifically the CC PLI, it puts India as a top investment destination."

Goel believes that the investment has come at the right time for the auto industry for thecountry to attract global investors. The Union Cabinet on Wednesday cleared Rs25,938 crore for the manufacture of electric and hydrogen fuel vehicles and components. Automobile companies that invest Rs2,000 crores for four-wheelers and Rs 1,000 crores for two-wheelers over five yearswill be eligible for the PLI scheme.

He also stated that this scheme aims to incentivise the future investors in the auto industry and not the past investors. He also stated that internal combustion engines (ICEs) are not excluded as this scheme will support advanced automotive technology."ICE could be anything, it could be diesel, ethanol, hybrid, electric or CNG, so all are included," the Secretary stated.

Rejoicing government's PLI investment, SIAM and ACMA have welcomed the announcement with associations stating that the investment indicates at government's efforts to further push theautomobile sector. Speaking with BizzBuzz, ACMA Director General, Vinnie Mehta, said that India's dependency on import of components needs to be waited out. "The intent is that we will be able to reduce the import content, the intent is that there will besizeable investment in the country for the automobiles technologies. These technologies are notmade in the country today, and if they are not made today, and tomorrow there is a flourishingmarket, then you will be 100 percent importing them. But if we have a sizeable investment, we willbe self-reliant and minimize the import,"Mehta said.

On relief to the auto segments post-Covid shocks, Mehta said: "I don't know about the Covid-ridden aspect, but when thegovt mentioned that the payout is around 18 percent if somebody qualifies for all and in which case of the payout is 18 percent and the risibility of operating in India isaround 14-15 percent, then I think the government is making all efforts to make sure that you areglobally priced competitive,"Mehta added.

On the expectancy of how this scheme may benefit the Indian auto industry, Society of Indian Automobile Manufacturers Director General Rajesh Menon said that the developments cannot be estimated at present."The auto manufacturing is already quite well established in India across the regions. But how this scheme will benefit a particular auto segment or export, or what kind of investors might come in, we will have to wait and see,"Menon told Bizz Buzz.