In a significant boost to India’s automotive industry, Tata Motors and Mahindra & Mahindra (M&M) have been approved for incentives totalling ₹246 crores under the government’s Production-Linked Incentive (PLI) scheme for the automobile and auto components sector.
Key Highlights
- Incentive Breakdown:
- Tata Motors: Claimed ₹142.13 crore based on eligible sales of ₹1,380.24 crore.
- Mahindra & Mahindra: Claimed ₹104.08 crore against eligible sales of ₹836.02 crore.
- Eligible Electric Vehicles:
Understanding the PLI Scheme
Launched in September 2021, the PLI scheme aims to:
- Promote domestic manufacturing of Advanced Automotive Technology (AAT) products.
- Attract investments across the automotive value chain.
- Enhance India’s competitiveness in the global automotive market.
With a budgetary allocation of ₹25,938 crore, the scheme is effective from FY24 to FY28, with disbursal of incentives scheduled between FY25 and FY29.
Eligibility Criteria:
To qualify for incentives, Original Equipment Manufacturers (OEMs) must:
- Achieve a minimum of 50% localization in their electric vehicles.
- Manufacture components related to electric vehicles and hydrogen fuel cells, which are eligible for incentives ranging from 13% to 18%.
- Produce other AAT products, which receive incentives between 8% to 13%.
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Impact on the Automotive Industry
The approval of these incentives is expected to:
- Encourage further investments in electric vehicle (EV) technology.
- Accelerate the adoption of EVs in India.
- Reduce the nation’s carbon footprint.
- Create employment opportunities within the sector.
As of September 2024, the scheme has attracted ₹20,715 crore in new investments and generated ₹10,472 crore in incremental sales.
Government’s Vision
Union Minister H D Kumaraswamy expressed satisfaction with the progress made by OEMs, stating that the PLI Auto scheme, along with initiatives like PM E-Drive and PLI Advanced Chemistry Cell, is expected to:
- Boost local manufacturing.
- Enhance India’s competitiveness in the global automotive market.
- Align with the ‘Make in India’ initiative and ‘Atmanirbhar Bharat’ vision.
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Stock Market Response
Following the announcement, shares of both companies saw an uptick:
- Mahindra & Mahindra: Increased by 4.20% on the BSE.
- Tata Motors: Rose by 2.10% on the BSE.
The benchmark Sensex also ended the day 1.83% higher.
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The disbursal of ₹246 crore in incentives to Tata Motors and Mahindra & Mahindra marks a pivotal moment in India’s journey towards sustainable and advanced automotive technologies. This move not only underscores the government’s commitment to promoting electric mobility but also sets the stage for a more self-reliant and competitive automotive industry in the global arena.
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