Slow lane

Govt should consider recalibrating auto PLI scheme's design and provide more support

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The Production-Linked Incentive (PLI) scheme for the automobile and auto components industry was launched with much fanfare in 2021. It was heralded as a transformative initiative to position the country as a global manufacturing hub for advanced automotive technologies. Yet, three years in, the progress remains underwhelming. The recent data from the ministry of heavy industries (MHI) shows that only 12 out of 82 approved applicants have managed to meet the mandated 50% domestic value addition (DVA) target. This means the majority of the players have not qualified for incentives.

In this context, the scheme could be revisited to assess whether or not the targets for DVA are realistic or whether the approach should be different altogether. If the PLI for smartphones, the highly successful scheme based on which other such plans were designed, serves as a guide, scaling up domestic assembly and becoming part of the global value chain should probably be the first priority. The focus on adding value domestically could probably come later.