Auto Industry: At the Cusp of Leapfrogging to Become a Global Leader in Advanced, New & Cleaner Technology

Under the able leadership of our Hon’ble Prime Minister, Shri Narendra Modi, our Government has embarked on a journey to make India the sought-after manufacturing destination in the world. The Government has drawn a holistic and integrated plan to achieve its objective, which includes reducing compliances, promoting ease of doing business, creating multi modal logistics infrastructure to reduce logistics cost, and most importantlypromoting manufacturing through Production Linked Incentive (PLI) schemes. These PLI schemes envisioncompensating theindustries for the cost disabilities that is impeding growth of the industries to achieve scale and size.

One of the key sectors identified for the PLI scheme,that is considered to bethe backbone of manufacturing, often christened “Sunrise Sector”, “Champion Sector”, with deep forward and backward linkages, is our“Auto industry”. My ministry, being the parent ministryof theAutomotivesector,took the charge of developing policies and schemes for the sector that promotes AthmaNirbharta and makes India a world leader in Auto manufacturing.

We held industry wide consultation with all stakeholders to understand the disabilities faced by the industry and then develop game-changing policies that would provide thrust to making India a leader in Advanced Automotive Technology products, Advanced Chemistry Cell and Environmentally cleaner vehicles.

The PLI scheme for Auto Sector (₹25,938 cr), along with PLI scheme for Advanced Chemistry Cell (₹ 18,100 cr) and Faster Adoption & Manufacturing of Hybrid &Electric Vehicles (FAME scheme)(₹ 10,000 cr), together has earmarked an approximate ₹ 54,000 cr for the automotive sector.These schemes envisage overcoming the cost disabilities of the industry and enablingthe industry leapfrog into becoming a leader in these areas.Added to these schemes, the incentive schemes for electronics (including auto electronics) and semi-conductors, would further provide benefits to the industry to develop a robust supply chain for automotive products for catering to the Indian and Overseas markets.

The schemes will also 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, which on the demand-side is receiving incentives through the FAME scheme and on the supply-side is being incentivizedthrough the PLI schemes for Auto Sector and Advanced Chemistry Cell.

The preliminary Industry consultation, that took place before unveiling of the Auto PLI scheme, helped us understand that internal inefficiencies, technology gap, lack of a local supplier base and economies of scale, cost us about 15% in the production of advanced automotive technologies. Hence, the Ministry developed the scheme with an objective to provide incentive upto18% to eligible companies.

After unveiling of the policy, I spearheaded a session with officials from Central Government, State Governments and leaders from the auto industry in Goa. The appreciation and accolades received from the industry during the session was exceptionally encouraging and made us believe that we have been able to deliver on our promises and the industry will make the best out of the policy. The overwhelming response to the scheme, with a record 115 applicants, is yet another hallmark of the phenomenal success of the scheme.

While the Auto PLI scheme will provide incentivesand cost the Government ₹25,938 cr, it will encourage industry to make fresh investments.Moreover, the scheme will generate additional employment,facilitate the Automobile Industry to move up the value chain into higher value-added products, and helpus to achieve the commitments made by our Hon’ble Prime Minister at COP26summit in Glasgow.

We have recently released the list of 20 Applicants that have received approval under “Champion OEM Incentive Scheme” of the PLI Scheme for Automobile and Auto Component Industry, with an envisaged investment of ₹45,016 cr. The approved Champion OEMs include 10 in the passenger vehicle and commercial vehicle space, 4 OEMs in the two-wheeler and three-wheeler spaceand 6 in the new non-automotive investor space. My Ministry is now workingon finalizing the final recipients of the “Champion Component Incentive Scheme” and would be releasing the list soon.

The auto industry in facing the biggest disruption in its entirety of existence and the Government is committed to work on policies and schemes that ensure a smooth transition for the industry. The Government places its trust on the industry to make the best out of the policy measures being adopted to achieve the TripleAobjectives of AtmaNirbharta, Advancement in auto manufacturing and technology and Action for Climate Change.