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Extended PLI Scheme for Automobile and Auto Components

  • 04 Jan 2024
  • 3 min read

Source: PIB

Why in News?

The Ministry of Heavy Industries has recently extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year, with incentives now applicable for five consecutive financial years starting from 2023-24.

  • This decision has been made after receiving the approval of the Empowered Group of Secretaries (EGoS).
  • Companies failing to meet the first year's sales increase threshold will not receive incentives for that year.
    • However, they remain eligible for future benefits by achieving a 10% year-on-year growth over the first year's threshold.

What is a Production Linked Incentive Scheme?

  • About: PLI scheme is a government initiative in India that offers financial incentives to companies based on their incremental sales of products manufactured in India.
    • The scheme aims to drive domestic manufacturing, spur job creation, bolster exports, facilitate technology transfer, and diminish import reliance.
  • Key Features:
    • Sector-specific: The scheme is currently active in 14 key sectors: mobile manufacturing, manufacturing of medical devices, automobiles and auto components, pharmaceuticals, drugs, specialty steel, telecom & networking products, electronic products, white goods (ACs and LEDs), food products, textile products, solar PV modules, advanced chemistry cell (ACC) battery, and drones and drone components.
    • Incentive Rate: The incentive rate varies depending on the sector and product category, but can range from 4% to 6% of incremental sales.

What is the Status of the Automobile Sector in India?

  • India is the world’s third-largest automobile market. The Automobile Sector resulted in 5.41% of the total FDI inflow as per the September 2023 DPIIT Report.
  • The Electric Vehicle market is expected to grow at a CAGR of 49% between 2022-2030 and the EV industry would create 5 Mn direct and indirect jobs by 2030.
  • Related Government Initiatives:
    • FAME Scheme
    • Automotive Mission Plan 2016-26 (AMP 2026)

UPSC Civil Services Examination, Previous Year Question:

Q. Consider, the following statements : (2023)

Statement-I : India accounts for 3.2% of global export of goods.

Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement-II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

Ans: (d)

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