A few months ago, the World Bank lavished praise on India’s Production Linked Incentives (PLI) scheme. The scheme was even credited for accelerating India’s GDP growth rate and taking it to an impressive 8.7% forecast for the next financial year.
So, how is the PLI transforming India? Well, it is making ‘Make in India’ initiative a reality and is helping the country create lakhs of jobs. In fact, the PLI is all set to generate lakhs of skill-based jobs in the auto industry.
The Production Linked Incentives (PLI) scheme for automobiles and auto components sector is all set to transform the Indian auto industry. We are looking at lakhs of new jobs, and incremental production worth lakhs of crores of rupees.
Over 20 companies eligible to receive incentives
Ford, Tata Motors, Suzuki, Hyundai, Kia and Mahindra & Mahindra are among 20 companies who are eligible to receive incentives under the scheme. These applications have been given the approval as a part of the Champion Original Equipment Manufacturers (OEM) Incentives scheme.
Similarly, for the two wheeler and three wheeler categories, Bajaj Auto, Hero MotoCorp, Piaggio Vehicles and TVS Motor have been selected. Firms under the Non-Automotive Investor (OEM) category include Axis Clean Mobility, Booma Innovative Transport Solutions, Elest, Hop Electric Manufacturing, Ola Electric Technologies, and Powerhaul Vehicle.
Arun Goel, Secretary in the Heavy Industry Ministry said, “The 20 companies we selected have committed an investment of more than Rs 45,000 crore. So as per our scheme target, our scheme is of Rs 25,938 crore, so we expect this will lead to incremental production of Rs 2,31,500 crore.”
Launched with a total outlay of Rs 25,938 crore, the incentive up to 18 percent is to encourage industry to make fresh investments in indigenous supply chain of advanced products. This is with a view to ensure that India is able to move towards environmentally-friendly electric vehicles (EVs).
Strengthening the idea of Atmanirbhar Bharat
Goel disclosed that the scheme incentivises such products that are not being made in India already.
It means that we are looking at incremental production and goods worth Rs. 2,31,500 crore that would have otherwise been imported would now be made in India.
This is a part of the government’s Atmanirbhar Initiative and is supposed to help the local economy grow further, rather than simply importing and enriching other economies.
Don’t just assemble in India; but also Make in India
India is making it clear that it doesn’t want to get reduced into an assembling hub. For many foreign carmakers, it is quite convenient to bring in car parts and assemble them here. Such ventures aren’t going to figure in India’s PLI scheme.
Goel said that at least 50 percent of the value addition must be carried out domestically, by going up to Tier 3, which includes MSME (Micro, Small and Medium Enterprises).
Goel said, “So, if somebody is importing cars from outside India and just screwing them up here, assembling them, he will not get benefits under the scheme. He has to produce at at least 50 per cent in India in terms of value addition.”
7.5 lakh jobs to be generated
The Heavy Industry Secretary pointed out that with the latest move, MSMEs will be able to ramp up their revenues, which will stimulate job creation. He added, “So, we are estimating 7.5 lakh additional jobs to be created in India as a result of this scheme in the next five years.”
What the PLI is doing to India is that it is localising production by both domestic and foreign firms in India. And further, a trickle-down effect is being created with supply chains also getting localised. Small Indian firms are getting a chance to play a major role in economic growth by supplying inputs to the big producers.
And now, the incentives scheme is all set to stage a major turnaround in the automobiles sector.