Thu. Sep 16th, 2021


The Union Cabinet had cleared a new production linked incentive (PLI) scheme to boost vehicle production in the country. Reports suggest an incentive scheme of nearly Rs. 26,000 crore for the auto sector, for a period of 5 years.



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The incentive scheme is to promote petrol technology, with added benefits for electric vehicles (EVs)

The Government of India has reportedly approved a new production linked incentive (PLI) scheme to boost vehicle production in the country. More details about the package are expected to be announced by the cabinet ministry later. According to previous reports, the Union Cabinet had cleared a scheme of nearly ₹ 26,000 crore for the auto sector, for a period of 5 years. This is about 50 per cent less compared to the government’s original plan to allot about ₹ 57,043 crore to promote mainly petrol technology, with added benefits for electric vehicles (EVs).

Also Read: India Revamps Incentives For Autos To Boost EVs, Hydrogen Fuel Cells: Report

At the moment, it’s not clear why the allocation had been revised, but one of the sources said that since the focus had changed to clean and advanced technology fewer companies would be eligible for the incentives. Earlier, Reuters had reported saying that the scheme was redrawn by the Government to focus on companies that build electric and hydrogen fuel-powered vehicles. However, it’s interesting to see the focus shift towards green technology after Elon Musk, CEO of Tesla, which is set to begin its India operations soon, commented about India’s high taxes on the auto sector.

Also Read: Tesla Gets Approval For Testing Four Models In India​

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The scheme was redrawn by the Government to focus on companies that build electric and hydrogen fuel-powered vehicles

Earlier, it was also reported that while the initial allocation over the five-year period has been reduced, the original scheme of ₹ 57,043 crore could be made available if the scheme is successful, initial funds are spent, and certain conditions are met. The scheme will cover all original equipment manufacturer (OEM) – both vehicles as well as manufacturers of parts like electronic power steering systems, automatic transmission assembly, sensors, sunroofs, tire pressure monitoring systems, automatic braking, and collision warning system, and more.

Also Read: Government Approves ₹ 18,100 Crore Towards Production Linked Incentive To Promote ACC Battery Manufacturing

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The scheme will cover all original equipment manufacturer (OEM) – both vehicle and parts manufacturers

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In addition to the PLI for the auto sector, the government has also cleared the much-expected relief package for the country’s cash-strapped telecoms sector, a senior government source said. The so-called relief package, which is likely to include a moratorium on payments for airwaves, will help India’s three major wireless carriers including tycoon billionaire Mukesh Ambani’s Reliance Jio but especially the embattled Vodafone Idea.

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