Disruptive PLI program in the automotive sector to revitalize incumbent operators, …
(MENAFN – IANS)
New Delhi, Sep 19 (IANS) The government’s Productivity Incentive Program (PLI) for the automotive and auto components industry is set to dramatically disrupt the industry, pushing existing big players to open their doors. A game plan on electric vehicles (EVs) and vehicles manufactured using newer technologies while bringing several new players into the fray competing for a share of the larger market.
Sources indicated that major automotive players such as Hyundai, Tata Motors, Maruti Suzuki have already started to study their production plan with the PLI program in mind. Several smaller players and startups, who have just started their journey into the EV space, have also started discussions to increase production in line with the PLI scheme.
“Government support for new technologies and electric vehicles will continue. After FAME II and PMP, PLI will further unleash the potential of 2 and 3 wheel electric vehicles. PVs and CVs will have to wait until they reach the viability of a total cost of ownership (TCO). Automotive component companies will see further improvement in their cost competitiveness and help position India as an export hub, ”said Hemal Thakkar, Director of CRISIL Research.
Another analysis by Kotak Institutional Equities that the PLI program is rapidly adopted by the electric vehicle segment, especially two-wheelers and incumbents, will need to step up. For manufacturers of automotive components, the government will offer incentives in the range of 8 to 13 percent with an additional incentive of 5 percent for manufacturers of hydrogen fuel cell and cell components.
“The main beneficiaries in the field of automotive components will mainly be global multinationals such as Bosch, Continental, Delphi Automotive, Denso Corporation. Within our coverage universe, Minda Industries, Endurance Technologies, Varroc Engineering and Schaeffler India can benefit from this program, ”said the brokerage firm. noted.
The commercial vehicle segment is also taking advantage of the opportunity offered by the PLI program. “As a leading manufacturer and exporter of commercial vehicles, as well as a technology leader since its inception, Daimler India Commercial Vehicles welcomes the opportunities offered by the new PLI program. This initiative will encourage investments in vital technologies related to sustainability, carbon neutrality and more, “said Satyakam Arya, Managing Director and CEO of Daimler India Commercial Vehicles (DICV).
The automobile is one of the most important sectors, contributing 7.1 percent of our GDP and employs around 37 million people directly and indirectly. The industry was under pressure even before CO, and was hit hard afterwards due to the shortage of chips. According to a CRISIL, the overall capacity utilization rate among manufacturers of four-wheeled vehicles fell to 50-55 percent at the end of fiscal year 21, from 70 to 75 percent in 19. The future Industry would be determined by new technology and this is where PLI-driven manufacturing would come in handy.
“This PLI program was eagerly awaited and will help stimulate the production of new generation vehicles that are cleaner and more respectful of the environment. It will also help to increase the extra capacity for high-tech safety-related components, which is very critical given the high number of road accidents. in the country, ”said Rajeev Singh, Partner and Automotive Leader, Deloitte India.
The government on Wednesday approved the PLI program for the automotive industry with an expenditure of Rs 26,400 crore which was reduced from the initial expenditure of Rs 57,000 crore. The current PLI program aims to enable India to switch to electric vehicles and encourage the emergence of an advanced automotive technology supply chain in India. The Automotive PLI program is open to existing automotive companies as well as to new investors who are not currently in the automotive or automotive component manufacturing industry.
The scheme has two components, viz. Champion OEM Incentive Scheme – “sales value linked” program, applicable to BEVs and hydrogen fuel cell vehicles in all segments, and Component Champion Incentive Scheme – “sales value linked” program, applicable to automotive technology components advanced 2-wheelers, 3-wheels, passenger vehicles, utility vehicles and tractors.
The program will be effective from FY2023 for five years and the base year for the eligibility criteria would be FY2020. A total of 10 OEMs, 50 automotive component manufacturers and five new non-automotive investors will benefit. of this program. To benefit from the program, OEMs must have a minimum income of Rs 10,000 crore and an investment of Rs 3,000 crore in fixed assets, automotive component manufacturers must have a minimum income of Rs 500 crore and an investment of Rs 150 crore in immobility.
New non-auto investors must have a global net worth of Rs 1,000 and a clear business plan to invest in advanced automotive technologies to be eligible for the PLI program. Incentives under the PLI auto program will range from 8% to 13%, with an additional 5% incentive for electric and hydrogen fuel cell vehicles.
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