India’s PLI Scheme Aims to Boost the Automobile and Parts Sectors

The Indian automobile industry has been sluggish for more than two years due to the sharp slowdown of economic growth from the latter half of 2018, and the outbreak of the new coronavirus at the beginning of 2020 when signs of recovery began to appear. In response to the prolonged severe business environment in India, the Indian government has decided to introduce large-scale support measures for automobile and parts manufacturers.

On November 11, 2020, the Government of India decided to add the automobile and parts industries to the policy “Production Linked Incentive (PLI)” scheme which is aimed at the promotion of the manufacturing industry. The PLI scheme was announced in April 2020 with the aim of attracting investment in the manufacturing industry and domestically producing vital products. So far, it has been introduced for mobile phones and pharmaceuticals, but this time the government announced that it will add 10 new fields such as advanced batteries and special steel in addition to automobiles and parts. Over the next five years, the government plans to provide 1.45 trillion INR in total in 10 fields, with the highest amount of 570 billion INR, which accounts for 40% of the entire sum, is allocated for the automobile and parts industries. This amount is far greater compared to the budget of 100 billion INR of the “FAME India Phase 2” program which covers three years and sets incentives for purchasing BEVs. For this reason, the scheme was uniformly welcomed by industry insiders.