How PLIs can help India leapfrog to green mobility

What is the News?

A transition to   green  vehicles  with  lower and, ultimately, zero carbon emissions has presented an opportunity for India’s auto sector to develop capabilities in these new technologies. For this, Production-linked Incentive (PLI) schemes can play a role.

What are Productive Linked Incentive(PLI) Schemes?

PLI Schemes are a cornerstone of the Government’s push for achieving an Atmanirbhar Bharat.

The objective of these schemes is to make domestic manufacturing globally competitive and to create global Champions in manufacturing. 

The strategy behind schemes is to offer companies incentives on incremental sales from products manufactured in India over the base year. 

How can PLI Schemes help in green mobility?

The auto sector represents nearly half of India’s manufacturing gross domestic product(GDP). 

However, indigenous production of auto components or technologies has not helped the industry move up the technological value-add ladder.

At present India and the world are transitioning to green technologies and global supply chain disruptions lead original equipment manufacturers(OEMs) to explore a ‘China + 1’ sourcing model. This facilitates India with a unique opportunity to build cutting-edge domestic capabilities in these areas, develop skills, overcome cost disabilities, create economies of scale, and build a robust supply chain.

Which PLI Schemes can help build a green ecosystem?

Local production of advanced and future-ready automotive technologies requires an ecosystem. The government is keen on nurturing it. 

To that effect, financial sops under three different PLI schemes: 1) PLI scheme for automobiles and auto components 2) advanced chemical cell (ACC) battery storage scheme and 3) Scheme for the development of a semiconductor manufacturing ecosystem, directly and indirectly, address the issues of encouraging local production of new technologies such as battery electric vehicles (BEVs), hydrogen fuel cells, and advanced auto components.

What is the significance of these PLI Schemes?

The PLI schemes enforce a positive bias towards technology led capacity enhancement. PLI schemes, which began with incentivizing cell phone production, have now been expanded to areas such as semiconductors and hydrogen fuel cells and have made an alternative capital pool available.

Source: This post is based on the article “How PLIs can help India leapfrog to green mobility” published in Livemint on 21st Mar 2022.