Union Budget 2024 | PLI scheme for auto sector drew ₹67,690 crore investment

The PLI scheme for automobile and auto components has a budgetary outlay of Rs 25,938 crore from FY23 to FY27.

Bengaluru: The Production Linked Incentive (PLI) scheme for the automobile and auto components industries has so far attracted a total proposed investment of Rs 67,690 crore, with Rs 14,043 crore already invested by end-March 2024, according to the Economic Survey 2023-24 presented in Parliament on Monday. The scheme was launched in 2020.

The government made a budgetary provision of Rs 25,938 crore for the scheme between FY23-FY27, dividing it between what is called “champion original equipment manufacturers (OEMs)” and “component champion incentive”. 

The Survey pointed out that between 85 applications approved under the scheme, about 1.48 lakh jobs were projected to be generated, of which 28,884 were created by March 31.

"Government should re-open the applications for the auto PLI scheme, just as it has done with other PLI schemes.  This will enable the other OEMs and original equipment suppliers (OES) who have not been able to take the decision for investment in the past, to apply under the scheme", urged Saurabh Agarwal, Partner and Auto Tax Leader, EY. 

Green mobility

The government also provided an outlay of Rs 18,100 crore  to enhance the manufacturing capabilities of advanced chemistry cell (ACC) batteries  by setting up of Giga scale ACC and battery manufacturing facilities. On January 24, the government sought bids for a total manufacturing capacity of 10 GWh. It received bids for a cumulative capacity of 70 GWh.

Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II),  the government approved outlay of Rs 11,500 crore for 5 years during FY20 to FY24. With this, It incentivised 13,21,800 e-vehicles between FY19 and FY24.

"We expect the government to continue with FAME III with an outlay of 10,000 crore or so. However subsidy per vehicles may go down given the growth in the industry", said Rajat Mahajan, Partner, Consulting, Deloitte India.

"The subsidy linked support for electric vehicles is expected to continue by way of enhanced budgetary allocation (extending to child parts as well), benefiting both manufacturers and consumers. Apart from vehicle purchases and setting up manufacturing plants, incentives are also expected for investments in EV charging infrastructure, technology", said Srikumar Krishnamurthy, Senior Vice President and Co-Group Head - Corporate Ratings, ICRA.

In FY24, according to the report, the country produced approximately 49 lakh passenger vehicles, 9.9 lakh three-wheelers, 214.7 lakh two-wheelers, and 10.7 lakh commercial vehicles.

Union Budget 2024 | Making a record for any Finance Minister, Nirmala Sitharaman will be presenting her 7th Union Budget on July 23, 2024 under the Modi 3.0 government. While inflation has burnt a hole in the pockets of 'aam janata', will this Budget spell relief for Indians? Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.