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The Cabinet on Wednesday has cleared the much-awaited automotive production-linked incentive (PLI) scheme with an outlay of Rs 25,938 crore.

CNBC-TV18 caught up with heavy industries secretary Arun Goel who played a key role in drafting the scheme.

When asked why the focus is on advanced automotive technologies, as the earlier scheme was envisaged for the entire automotive industry including the internal combustion ecosystem (ICE), Goel said, firstly, this scheme is for the entire industry, it is for the ICE, as well as for electric vehicles.

“Secondly, when we had a widespread discussion with all the stakeholders, the government tried to identify, which are our strengths, and which are our weaknesses.”

The Indian automotive industry has been a grand success story over the past three and a half decades, he added.

“But today our total exports are 27 billion when the global automotive trade is one and a half trillion, so we are less than 2 percent. We are very strong in mass-market but low value, low technology products. So the question is the future, going forward.”

“If you see in reality, the auto industry around the world is facing the biggest disruption now, with the advent of EVs and we can’t be left behind. So we have tried to see the missing global supply chains in India, and how do we bring them in here. We have in this scheme, tried to incentivise the industry so that the supply chains where we are weak, should be strengthened. That’s the whole objective behind it,” said Goel.

According to the scheme, the manufacturers that are eligible for vehicle OEMs, electric vehicles and hydrogen fuel cell vehicle makers, for component makers, there is a list of nearly 22 items. So, when asked when it comes to vehicle manufacturers, will the scheme be limited in scope to EV and hydrogen fuel cell vehicle makers?

Goel said, “You are mistaking between the vehicle and the vehicle maker. Now, so far as vehicle maker is concerned, everybody is eligible. Now, there are two things when the entire vehicle is eligible or a part of the vehicle is eligible.”

“When you’re talking of the entire vehicle then, of course, that is hydrogen fuel cell, electric vehicle, or any other future technology vehicle which we may have, so that is an open-ended thing but you will agree internal combustion engine (ICE) is not a new technology, it is 100 years old, it is improving,”

“The new technology when we are talking of connected vehicles, shared vehicles, autonomous vehicles, they come in ICE also,” said Goel, adding that the existing ICE manufacturers are eligible to take benefit of this scheme for the new technologies, which they will be adding to the ICE.

So, will a company that is not making electric vehicles or hydrogen fuel cell vehicles right now be eligible for this scheme, Goel said ‘yes’ and they would be able to take benefits of the scheme.

The initial outlay of the scheme when envisaged in November 2020 was Rs 57,000 crore and now the outlay is nearly Rs 26,000 crore.

Talking about the outlay, Goel said the scheme has been approved today and after consultation with the entire industry, the government tried to identify where it is weak.

“So, we have to strengthen our industry where we are weak. Now, this structural change is not going to happen overnight but the government is trying to act as a catalyst.”

“Our requirement has not been cut down by anybody. So under the scheme, the requirement is being fully met with, I invite the industry to encash this requirement and we will see when they fully exhaust it only then you can say the funding has been cut,” specified Goel.

CNG manufacturers are disappointed and say they have not been included either in the components scheme or the vehicle manufacturer scheme.

Is there scope for further representation, further change?

Goel clarified, “No, it’s a misconception first of all. CNG is very much included. ICE is technology – for fuel you can have petrol, you can have diesel, you can have CNG, you can have ethanol and anything. All these are the fuels for ICE and ICE is covered, so CNG is covered. There is no need of any representation, we have already included it right.”

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When asked if there was a scope for further increasing the outlay of the scheme in the future, Goel said let the industry exhaust it first. “I think we are being imaginative or speculative? Let us first exhaust the Rs 25,938 crore over the next five years. Let’s do it first,” he said.

For the full interview, watch the accompanying video

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By ev3v4hn