The Union Cabinet on Wednesday approved the ₹26,000 crore Production Linked Incentive (PLI) scheme for automotive industry with key focus on new energy vehicles (NEVs), enhancing local manufacturing capabilities of advanced automotive technologies.
The PLI scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business. The scheme has two components – Champion OEM Incentive scheme and Component Champion Incentive scheme.
“The PLI scheme provides a clear direction that policy makers remain focussed on promoting NEVs vis-à-vis traditional ICE vehicles. However, on the component side a list of 22 advanced technologies (details awaited) which have been identified for aggressive localisation in India,” brokerage firm ICICI Securities said in a note.
Various original equipment manufacturers (OEMs) have raised concerns on ICE vehicles being excluded from the incentives scheme. The brokerage believes, amongst the OEMs Tata Motors, M&M, TVS Motors and Ashok Leyland (have announced investment plans for NEV’s) would likely be able to avail benefit from the PLI scheme.
Another brokerage Motilal Oswal said that while this scheme seems to be straightforward from an OEM perspective, it believes that it is difficult to judge possible winners among the auto component players as it aims to incentivize components that are not currently made in India.
“In the OEM Universe, Bajaj Auto and TVS would benefit on their e-scooters and Tata Motors on its electric PVs. While details regarding approved products are awaited, from our coverage universe, players such as BOS may benefit (for EV components). Based on the current product portfolio, we do not see any other auto components under our universe to be a major beneficiary of this scheme,” Motilal note added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
Never miss a story! Stay connected and informed with Mint.
our App Now!!