The Union Cabinet in a recent move has given its approval for a Production Linked Incentive (PLI) scheme valued at Rs. 26,058 crore. This scheme, targeted towards auto, auto-components and Drone industries, aims to boost India’s manufacturing capabilities. Being part of the broader production-linked incentives announced for 13 sectors in the Union Budget 2021-22 with an outlay of Rs 1.97 lakh crore, this scheme marks another significant step towards ‘Atma Nirbharta’ or self-reliance.
About the PLI Scheme
Introduced in March 2020, the PLI scheme aims to provide companies with incentives on incremental sales from products manufactured domestically. The scheme encourages both foreign companies to establish their businesses in India and local firms to set up or expand existing manufacturing units. It has also been approved for sectors such as automobiles, pharmaceuticals, IT hardware including laptops, mobile phones & telecom equipment, white goods, chemical cells, food processing, and the Textile Sector.
PLI for Auto Sector: Overview and Significance
The PLI for the Auto sector excludes conventional petrol, diesel and CNG segments (Internal Combustion Engine) considering the sufficient capacity in India. Instead, the focus is on incentivizing advanced automotive technologies or auto components with weak, dormant, or non-existing supply chains. The scheme aims to boost the economy of clean fuels and new technology.
The scheme includes two major components. The Champion OEM (Original Equipment Manufacturers) Scheme aims at Battery Electric and Hydrogen Fuel Cell Vehicles of all segments, and the Champion Incentive Scheme is applicable for advanced technology components, Complete and Semi-Knocked Down (CKD/SKD) kits, and vehicle aggregates of multiple vehicle types.
The scheme, along with the PLI for Advanced Chemistry Cell and Faster Adoption of Manufacturing of Electric Vehicles (FAME) Scheme, is expected to boost electric vehicles’ manufacture considerably. It will also contribute towards reducing carbon emissions and oil imports. The scheme promises to boost localisation, domestic manufacturing, and attract foreign investments, while creating more jobs in the process. An estimated 7.5 lakh jobs are expected to be generated in the auto sector.
PLI for Drone Sector: Overview and Significance
The PLI for the Drone Sector covers a wide array of drone components, including airframes, propulsion systems, power systems, batteries, flight control modules, communication systems, cameras, sensors, among others. The drone sector is expected to witness fresh investments of over Rs 5,000 crore and incremental production of over Rs 1,500 crore. Additionally, about 10,000 new jobs are projected to be created through this scheme.
This PLI scheme for drones aims to stimulate entrepreneurs to build drones, components, and software for the global market. It will also open multiple verticals for the utilisation of drones. The scheme is expected to help reduce imports considerably as currently, about 90% of the drones in India are imported. Through this scheme, the government intends to transform India into a global drone hub by 2030.
