Rs. 26-k cr PLI boost for auto, drones

- Existing auto players will have to make new investments of Rs1,000 cr over next 5 yrs to benefit from the scheme

- New players will have to invest over Rs2,000 cr

- New units in auto component sector will have to invest Rs500 cr

- While existing players will have to invest Rs250 cr

- Drone manufacturing industry may grow from Rs 60 cr in FY21 to over Rs 900 cr in FY24

- Will generate over 10,000 direct jobs in next 3 yrs

- Drone services industry may grow to over Rs30,000cr by FY25

- 20% PLI constant for 3 yrs for drone sector

New Delhi: The Union Cabinet on Wednesday approved a Rs26,058-crore production linked incentive (PLI) scheme for auto, auto-components and drone industries to enhance India's manufacturing capabilities, Union Minister Anurag Thakur said on Wednesday. The PLI scheme will incentivize the emergence of advanced automotive technologies' global supply chain in India. Incentives worth Rs 26,058 crore will be provided to industry over five years, the minister told reporters after the Cabinet meeting.

It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to fresh investment of over Rs42,500 crore, incremental production of over Rs 2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs, Thakur said.

The PLI scheme for automobile and drone industries is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs1.97 lakh crore. The 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 industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products, Thakur said.

Drone manufacturing

The total amount allocated for the PLI scheme for drones and drone components is Rs120 crore spread over three financial years. This amount, according to an official communique, is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21. The proposed tenure of the PLI scheme is three years, starting FY22.

"The incentive for a manufacturer of drone and drone components shall be as high as 20 per cent of the value addition. The value addition shall be calculated as the annual sales revenue from drones and drone components (net of GST) minus the purchase cost (net of GST) of drones and drone components," the communique said.

As per the communique, the government has agreed to keep the PLI rate constant at 20 per cent for all three years, an exceptional treatment given only to the drone industry. "In PLI schemes for other sectors, the PLI rate reduces every year," it said.

Coming back to automobile sector, the scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business. The scheme has two components - 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 minister said. 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.

This PLI scheme for automotive sector along with the already launched PLI scheme for Advanced Chemistry Cell (Rs 18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (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. Further 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 scheme will over a period of three years, lead to investments worth Rs 5,000 crore, an increase in eligible sales of Rs 1500 crore and create additional employment of about 10,000 jobs.