How PLIs can help India leapfrog to green mobility

Contact Counsellor

Last Updated21/03/2022

A thrust on rapid transition to green vehicles with lower and ultimately, zero carbon emissions, has presented an opportunity for India’s auto sector to leapfrog to new technologies.
Production-linked incentive (PLI) schemes for this sector can play a big role in this aspect.

The auto sector represents nearly half of India’s manufacturing gross domestic product (GDP).
However, indigenous production of auto components or technologies has not helped the industry move up the technological value-add ladder.
As India and the world transition to green technologies and as global supply chain disruptions lead original equipment manufacturers (OEMs) to explore a ‘China + 1’ sourcing model
India is presented with a unique opportunity to build cutting-edge domestic capabilities in these areas, develop skill, overcome cost disabilities, create economies of scale, and build a robust supply chain.

Local production of advanced and future-ready automotive technologies requires an ecosystem
Financial sops under three different PLI schemes—the PLI scheme for automobiles and auto components, the advanced chemical cell (ACC) battery storage scheme, and the scheme for the development of a semiconductor manufacturing ecosystem
These schemes directly and indirectly address the issues of encouraging local production of new technologies such as battery electric vehicles (BEVs), hydrogen fuel cells, and advanced auto components.

The Centre will extend incentives to existing players, startups, non-automotive or non-energy players in the battery production PLI scheme.
In the PLI scheme for advanced automotive technologies, incentives will be for established foreign and domestic OEMs and new non-auto investors.

The PLI scheme enforces a positive bias towards technology-led capacity enhancement and it can be effectively be read as a "tech-led incentive scheme" for transition to green mobility and sustainable future for auto sector.