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The Indian automotive industry is experiencing a significant boost thanks to the Production Linked Incentive (PLI) scheme, a government initiative designed to enhance domestic manufacturing capabilities in Advanced Automotive Technology (AAT) products. Recently, two prominent players, Mahindra & Mahindra and Tata Motors, have successfully claimed a combined ₹246 crore in PLI incentives for their incremental production of AAT products during fiscal year 2023-24. This substantial amount highlights the scheme's effectiveness in attracting investments and fostering growth within the sector. The scheme, with a budgetary allocation of ₹25,938 crore, aims not only to increase production but also to address the cost disabilities faced by Indian manufacturers and to develop a robust and competitive supply chain for AAT components, which is critical to India's global competitiveness in the rapidly evolving automotive landscape.
Mahindra & Mahindra's claim of ₹104.08 crore is based on incremental sales of ₹800.59 crore, primarily driven by their electric three-wheeler (e3W) models – Treo, Treo Zor, and Zor Grand. These sales, amounting to ₹836.02 crore, met the required 50% domestic value addition criteria, as certified by the Automotive Research Association of India (ARAI). This signifies Mahindra's commitment to electric mobility and its success in leveraging the PLI scheme to support its expansion in this burgeoning segment. The company's cumulative investment under the scheme reached ₹978.30 crore, demonstrating substantial financial commitment to the growth of electric vehicle technology in India. This investment showcases a proactive approach to aligning with the government's agenda of promoting sustainable transportation solutions and reducing carbon emissions.
Tata Motors, on the other hand, claimed approximately ₹142.13 crore in PLI incentives based on their AAT product sales totaling ₹1,380.24 crore during the same fiscal year. Their eligible sales include a range of electric vehicles, showcasing a diversified portfolio encompassing the Tiago EV (electric four-wheeler), Starbus EV (electric bus), and Ace EV (electric cargo vehicle). This diversified approach demonstrates Tata Motors' commitment to providing electric vehicle solutions across various segments, indicating a broader market penetration strategy and a commitment to capturing a large share of the growing Indian electric vehicle market. The success of Tata Motors in obtaining these incentives underscores the scheme's effectiveness in encouraging the development and adoption of electric vehicles, a key component of India's transition towards sustainable transportation.
The successful claims by Mahindra & Mahindra and Tata Motors represent a significant milestone for the PLI scheme. The total claims of approximately ₹246 crore, after rigorous examination and approval by the Project Management Agency (PMA) and the Ministry of Heavy Industries (MHI), demonstrate the transparency and efficiency of the incentive disbursement process. This success story serves as a powerful incentive for other automakers and auto component manufacturers to participate actively in the scheme, contributing to the overall growth of the Indian automotive sector. As of September 2024, the scheme has already facilitated an investment of ₹20,715 crore, resulting in incremental sales of ₹10,472 crore, showcasing its considerable impact on the industry.
The PLI scheme, approved on September 15, 2021, and designed to operate from fiscal 2023-24 to 2027-28, is expected to continue driving significant investments and growth in the Indian automotive industry. The first incentive disbursement is anticipated in financial year 2024-25, marking another significant step in realizing the scheme's full potential. This long-term vision ensures sustained support for the industry, encouraging further development and innovation in Advanced Automotive Technology. The success of this initiative has implications far beyond the immediate financial gains, contributing to India's technological advancement, job creation, and its emergence as a global leader in the electric vehicle and automotive technology sector.
The scheme's success relies on its ability to attract investments and incentivize domestic value addition. The 50% domestic value addition requirement ensures that the benefits of the scheme are channeled towards enhancing India's manufacturing capabilities and boosting the domestic economy. Furthermore, the tiered incentive structure, ranging from 8% to 18% depending on the type of AAT component, provides targeted support to specific areas that require greater investment and development. The government’s clear commitment to supporting the auto industry, particularly in the electric vehicle segment, creates a conducive environment for innovation and growth, attracting both domestic and foreign investments.
The absence of a response from Mahindra & Mahindra and Tata Motors to emailed questions regarding their PLI claims does not detract from the significance of their achievement. The publicly available information provided by the Ministry of Heavy Industries confirms the substantial incentives received and underscores the impact of the PLI scheme on the industry. The overall success of the scheme and the positive outcomes for participating companies showcase the effectiveness of government initiatives designed to boost domestic manufacturing capabilities and strengthen India's position in the global automotive market. The future of the Indian auto industry appears bright, fueled by innovation, government support, and a strong commitment to sustainable transportation solutions.
Source: Mahindra & Mahindra and Tata Motors claim Rs 246 crore as production linked incentive (PLI)