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NEW DELHI : The Union cabinet cleared the production-linked incentive (PLI) scheme for the automobiles and auto componentsectors on Wednesday, the only ones pending out of the 10 PLIs announced last year. In an interview, heavy industries secretary Arun Goel explained the rationale behind the scheme. Edited excerpts:

 

Why was the structure of the PLI scheme for automobiles changed, and why did the government significantly slash the initial allocated amount of 57,000 crore to 25,938 crore?

We had extensive consultations with the industry, and we identified what they required.

Our Indian auto industry is a great success story. But when we compare with the global auto industry, there are some weaknesses in the Indian auto industry, like advanced automotive technology is 3% of the total production of the auto industry, whether it is internal combustion engine (ICE) vehicle or electric vehicle (EV). But if you look at the global ratio, it is 18%. So, most of these products are imported, like auto electrical, auto electronics and components for engine and transmission.

Through this scheme, we are trying to help the industry restructure so that the supply chains which are non-existent or weak are set up in our country.

We are meeting the cost disability as told to us by the industry fully. So, the incentive is to the tune of 18% of sales, which is very high.

Having fully met the industry demand, then we did the calculation of funds required if all of this is done over the next five years.

Is the scheme only for green technology?

No, it is for advanced automotive technology, which is for both electric vehicles or hydrogen fuel cells, which are so-called green, as well as for internal combustion engines (ICE). CNG (compressed natural gas), petrol, diesel or ethanol vehicle manufacturers are also eligible, but only for advanced automotive technology products that they put in these vehicles.

Will there be a higher incentive for green tech products?

Yes, for advanced automotive technology products, if they are for electric vehicles or hydrogen fuel cell vehicles, they will have an additional 5% incentive.

How many companies do you expect will benefit from this scheme?

As per our estimate, there is great enthusiasm in the industry. We are going to select the companies on the basis of the net present value of the investment they are going to bring in investments, which means the earlier you bring in investment, the higher is your eligibility.

PLI schemes have been criticized because they put discretion at the hands of bureaucrats. What’s your view?

There is absolutely zero discretion. It shall be entirely transparent and shall be driven jointly by the industry and the government.

Pune-based testing agency Automotive Research Association of India is run by the industry. Under FAME (Faster Adaption of Manufacturing of Electric Vehicles), their products are being certified by them. So, the same is going to be the pattern in this scheme.

The industry shall have no complaints once it comes into operation. We shall ensure it.

Do you expect Tesla to come via this scheme?

I think all global MNCs will look at this PLI and they will feel encouraged to come and take advantage of it because we are meeting the cost disabilities projected by the industry fully.

What is the reason behind including drones in this PLI scheme?

Automobiles provide mobility and transportation. Drones also provide transportation of various types. It is a kind of automotive.

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