PLI Scheme: How Can It Play A Critical Role In Boosting The EV Manufacturing Sector?

The government approved the production-linked incentive (PLI) scheme recently in a bold move. The scheme’s battery policy aims to make manufacturers globally competitive, boost exports, achieve economies of scale and produce cutting edge products. With this, the EV industry is likely to get a strong impetus given the issues of high battery costs and lack of supporting infrastructure that the industry faced earlier. Indian companies generally import batteries, which account for more than half the cost of an EV. The government has proposed the building of local manufacturing facilities, seeking to reduce the cost and encourage competition.

So, how will this scheme prove beneficial to the EV industry. We asked this question to our experts and here is what they said…

We are glad to see the government’s continued focus on Atma Nirbhar Bharat and Make in India in the Union Budget of 2021. The government’s Production-Linked Incentive (PLI) scheme, implemented to boost manufacturing within India, will cover a total of 13 sectors including EV manufacturing with an outlay of ₹1.97 lakh crore over 5 years, starting from financial year 2021-22. The PLI Scheme is to create and nurture global champions in the Auto Sector under Atma Nirbhar Bharat Abhiyan. The scheme is announced with an aim to enhance India’s Manufacturing Capabilities and exports in automobile and its components sector.

The PLI scheme for Advanced Chemistry Cell (ACC) battery envisages incentivizing large domestic and international players in establishing a competitive ACC battery set-up in the country. It represents one of the largest economic opportunities for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy.

PLI Scheme is going to play a critical role in boosting the EV manufacturing scenario in the country as it envisages making the Indian automotive Industry more competitive and aims to enhance globalization of the Indian automotive sector and will additionally incentivize R&D in India.

By RAKESH CHOPRA – MD, REIL

In a major push to domestic manufacturing in the country, and to make India a manufacturing hub, the government recently approved production-linked incentives (PLI) scheme for ten sectors including automotive, auto components and advanced cell batteries. Currently, the EV industry demands a standalone and focused approach towards EVs. EV companies need to focus on local manufacturing, with innovation with new technologies in making them affordable and at par with ICE vehicles. This will also support the government’s objective of the country becoming self-reliant and enhancing domestic manufacturing. The recently announced Production Linked Incentives to spur lithium-ion cell manufacturing in India would be incremental to make this happen.

The manufacturing of these advanced chemistry cells can bring down EVs costs by a substantial amount and efforts in this direction will help introduce affordable electric mobility in the country. A shift to electric mobility without local cell manufacturing is counterproductive and initiatives like the PLI will help lessen the burdens of import substitution in the coming years.

More outlays towards indigenization of battery and cell manufacturing, this would in turn promote a thriving domestic ecosystem. We are at a nascent stage in EV manufacturing and adoption, and any level of standardization of battery production does not exist. The drive towards local manufacturing of cells and indigenisation will help achieve some level of battery standardization and make EVs affordable.

By JEETENDER SHARMA – FOUNDER & MANAGING DIRECTOR, OKINAWA

PLI scheme aims to give companies incentives on incremental sales from products manufactured in domestic units. The scheme invites foreign companies to set units in India and also aims to encourage local companies to set up or expand existing manufacturing units.

Towards a major push for EV vehicles, the PLI scheme for advanced chemistry cell (ACC) battery manufacturing was also approved on 11 November 2020. As battery cost in the EV can be upto 50% of the total vehicle cost, the battery policy could render the EVs affordable while using the latest & safe technology. Manufacturers will be eligible for the subsidy when they achieve 60% value addition within five years of project commencement. Any new technology that evolves over the next 10 years would also be eligible for a subsidy.

With the PLI & other schemes, India’s role in the EV sector is poised to get stronger through enhanced contribution in the global supply chain, more FE earnings, adoption of latest world class technologies & volume manufacturing benefits. Any automobile industry has hundreds of ancillary units and any expansion of EV manufacturing under PLI scheme will also result in mass scale skill development, employment & revenue generation. Considering the success of the PLI scheme for earlier products like mobile phones & extensive governmental support through the conducive new policies, the multifold growth & success of EV manufacturing & support systems is guaranteed.

By NEERAJ KUMAR SINGAL – DIRECTOR, SEMCO GROUP

Current supply chains of critical EV components have strong dependency on import.

• Battery- Only battery packaging capability currently exists in India.
• Motor- Local manufacturing capability is limited to small motors.
• Motor controller/Inverters- Completely dependent on import. Even for AC applications, 100% imported despite huge volumes.

The PLI scheme will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.

To boost the EV Manufacturing Sector incentives were announced for (i) automobiles & auto components and (ii) Advance Chemistry Cell (ACC) Battery under PLI scheme. Rs 18,100 crore has been announced for Advance Chemistry Cell (ACC) Battery. Rs 57,042 crore (highest in all 10 sectors) is announced for automobiles & auto components.

With Rs 57,042 crore outlays for auto and component industry, Rs 18,000 crores and Rs 46,000 crores allocated for Advanced Chemistry Batteries and electronics manufacturing respectively, Government wants to promote the manufacturing of EVs in India with plans to build Tesla style giga-factories and develop a home grown battery manufacturing ecosystem.