Budget 2024: Govt Ups PLI Allocation For Auto Industry By 600%

SUMMARY

For the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, the government has increased allocation to INR 250 Cr from INR 12.01 Cr in the revised estimates for the financial year 2023-2024

The PLI scheme corpus for the above two categories reflected the same numbers even in the interim budget of February

Notably, in the Economic Survey of 2023-24, the government had said that the auto PLI has attracted an investment of INR 67,690 Cr, of which INR 14,043 Cr has been invested till March 31, 2024

In an effort to further provide impetus to the automobile industry, the production linked incentive (PLI) scheme for automobile and auto components has been increased to INR 3,500 Cr in the budget for 2024-25, a 624% jump from INR 484 Cr in the revised estimates of 2023-24.

Meanwhile, for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, the government has increased allocation to INR 250 Cr from INR 12.01 Cr in the revised estimates for the financial year 2023-2024.

The PLI scheme corpus for the above two categories reflected the same numbers even in the interim budget of February.

Notably, in the Economic Survey of 2023-24, the government had said that the auto PLI has attracted an investment of INR 67,690 Cr, of which INR 14,043 Cr has been invested till March 31, 2024. So far, 85 applicants have been approved under the auto PLI scheme, which has a budgetary outlay of INR 25,938 Cr from FY23 to FY27.

The PLI-Auto Scheme was introduced in September 2021 with the focused on Zero Emission Vehicles (ZEVs) which include EVs as well as Hydrogen Fuel Cell vehicles.

Ola Electric, Rajesh Exports, and Hyundai Global Motors Company are among the beneficiary entities under the scheme. Other beneficiaries include Maruti Suzuki, Hero MotoCorp, Tata Autocomp, Mitsubishi Electric, Toyota Kirloskar, Motherson Sumi, Bosch, and Lucas-TVS.

However, the budget did not mention the third phase of the much anticipated Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

The report added that The initiative has led to the creation of 28,884 jobs out of the 1.48 Lakh jobs projected. To date, 85 applicants have received approval under the scheme.

Apart from this, the government also outlined an outlay of INR 493 Cr under the Electric Mobility Promotion Scheme (EMPS) to support the EV manufacturing ecosystem in the country.

This scheme was tenured for 4 months between April 1 and July 31 and was targeted to support 3.72 lakh EVs. However, it was earlier reported that the scheme managed to achieve only 3.6% of its targeted vehicle sales to date.

The breakup of the EMPS outlay marks INR 333.39 Cr for electric two-wheelers, INR 33.97 Cr for electric three-wheelers, electric rickshaws, and e-cart. Besides, an outlay of INR 126.19 Cr was also earmarked for electric three-wheelers in the L5 category.

Meanwhile, earlier this month union minister for heavy industries and steel, HD Kumaraswamy said that the centre is working on the implementation of the third phase of the FAME scheme but it is unlikely to be implemented in the upcoming Union Budget FY25. The FAME-III scheme was reported to have a budget outlay of INR 10,000 Cr.

This comes at the heart of the EV segment witnessing various developments in the adoption as well as regulatory front.

Just last week, automaker Bajaj Auto’s managing director (MD) Rajiv Bajaj reportedly said that regulatory uncertainty makes it “tough” to predict profitability for the electric vehicle (EV) segment.

The government in March also introduced a new EV policy that offers a reduced tariff on the import of EVs.

On the broader EV adoption front, the cumulative EV sales in India reached 41,35,077 units by the end of FY2024, as per a report by JMK Research and Analysis.

Just in FY24, the EV sales surpassed the 1.7 Mn mark with over 55% of the share coming from registered e2Ws, followed by passenger electric three-wheelers (E3W P) with 32% market share.