Cabinet Decisions: India Shifts Focus To EVs, Hydrogen Cells With Rs 26,000-Crore PLI Scheme

India cut incentives to boost local production of automobiles and shifted the focus to electric vehicles and hydrogen fuel cells as nation plans to build an ecosystem for cleaner mobility.

The union cabinet slashed the outlay for production-linked incentives for the auto sector by half to about Rs 26,058 crore, Union Minister Anurag Thakur told the media after the meeting. The government also announced incentives worth Rs 120 crore for the drone sector.

The scheme for auto industry has two components –

  1. Champion OEM Incentive Scheme: It’s a ‘sales value linked’ scheme, applicable on electric and hydrogen fuel cell vehicles in all segments.

  2. Component Champion Incentive Scheme: A ‘sales value linked’ scheme for advanced automotive technology components, completely knocked-down and semi knocked-down kits, vehicle aggregates of two-and three-wheelers, passenger and commercial vehicles, and tractors.

Thakur said the incentives for the auto sector are open to existing automotive companies as well as new investors.

The scheme for the sector is part of the overall production-linked incentives announced for 13 sectors in the budget 2021-22 with a total outlay of Rs 1.97 lakh crore.

“The PLI scheme for auto sector will bring fresh investments of over Rs 42,500 crore in five years and incremental production of over Rs 2.3 lakh crore,” Thakur said.

The incentives for drones, he said, are expected to bring fresh investments of more than Rs 5,000 crore in three years and incremental production of over Rs 1,500 crore.

The fresh automotive incentives come alongside a similar scheme for advanced chemistry cells, and the Faster Adaption of Manufacturing of Electric Vehicles plan. According to the government’s statement, these will help India leapfrog from traditional fossil-fuel based transportation system to cleaner, sustainable, advanced and more efficient EV-based based system.

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