The Central government selected 20 companies such as Tata Motors, Suzuki Motor Gujarat, Hyundai Motor India, Mahindra & Mahindra amongst others under the “Champion OEM Incentive Scheme” of the production-linked incentive (PLI) scheme for India's automotive sector. Other four-wheeler companies whose applications had been approved are Ashok Leyland, Eicher Motors, Ford India, PCA Automobiles India, Pinnacle Mobility Solutions, and Suzuki Motor Gujarat.
In the two-wheeler and three-wheeler segments, approved applicants include Bajaj Auto, Hero MotoCorp, Piaggio Vehicles, and TVS Motor Company. Additionally, six ‘new non-automotive investors (OEM)’ have gotten approvals. These are Axis Clean Mobility, Booma Innovative Transport Solutions, Elest, Hop Electric Manufacturing, Ola Electric Technologies, and Powerhaul Vehicle, according to an official release.
The Centre had notified the PLI scheme on September 23, 2022. The scheme has two components - Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The PLI scheme for automobile and auto components (₹25,938 crore) and the PLI for advanced chemistry cell (₹18,100 crore), along with the FAME Scheme (₹10,000 crore), are aimed at enabling India to leapfrog to an environmentally cleaner, sustainable, advanced, and more efficient electric vehicle(EV)-based system. Under the scheme, incentives are applicable for determining sales of advanced automotive technology products, including vehicles and components manufactured in India from April 2022 onwards for a period of five consecutive years.
The Champion OEM Scheme is a 'sales value linked' scheme, applicable on advanced automotive technology components of vehicles, completely knocked down (CKD), semi-knocked down (SKD) kits. The scheme covers two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, and tractors. Consequently, the scheme proposes financial incentives to facilitate domestic manufacturing of AAT products and draw investments in the automotive manufacturing value chain. Its prime objectives include overcoming cost disabilities, creating economies of scale, and building a robust supply chain in areas of AAT products. The Ministry of Heavy Industries said it received a massive response with a proposed investment of ₹45,016 crores from approved applicants. The PLI scheme will offer incentives of up to 18 percent to carmakers.
Given that the scheme is likely to generate around 750,000 jobs in the electric vehicle space. Fuel cell and component manufacturers, engineering and administrative talent are shifting to EV in a major way. While schemes like FAME II and other state subsidies have sought to make it effortless to buy EVs and expand EV infrastructure, no scheme until now has focused on streamlining the supply chain until PLI Scheme. The PLI Scheme will strengthen the manufacturing ecosystem and build a self-sustaining framework for the e-mobility industry.
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