Ola Electric Technologies Private Ltd has been sanctioned an incentive payment of Rs 73.74 crore under the Production Linked Incentive (PLI) Scheme for automobile and auto components for FY24, according to a regulatory filing by Ola Electric Mobility Limited. This likely makes it the first two-wheeler maker to do so.
"The payment of Rs. 73,74,36,612/- (Rupees Seventy-Three Crores Seventy-Four Lakhs Thirty-Six Thousand Six Hundred and Twelve only) has been sanctioned towards the incentive for the Determined Sales Value of FY 2023-24, as per existing terms and conditions of the PLI-Auto Scheme," the filing stated. The payment is specifically for sales achieved during the fiscal year 2023-24.
What is the PLI scheme?
The Production Linked Incentive (PLI) scheme represents one of India's most significant policy interventions aimed at boosting domestic manufacturing. Launched in 2020, the scheme was initially introduced for electronics manufacturing but was subsequently expanded to cover 13 key sectors, including automobiles and auto components.
With a total outlay of approximately Rs 1.97 lakh crore, the PLI scheme is designed to make Indian manufacturers globally competitive, attract investment, enhance exports, create employment, and build manufacturing capabilities.
The core principle of the PLI scheme is simple yet effective: provide financial incentives to companies on the incremental sales of products manufactured domestically. These incentives typically range from 4 percent to 6 percent of incremental sales, varying by sector, and are disbursed over a five-year period.
What is PLI-Auto?
The automotive sector-specific PLI scheme, known as PLI-Auto, was approved in September 2021 with a budgetary outlay of Rs 25,938 crore. The scheme primarily targets two categories: Champion Original Equipment Manufacturers (OEMs) focused on manufacturing advanced automotive technology vehicles and their components, as well as Component Champions, which include non-automotive companies entering the automotive sector and automotive component manufacturers.
The PLI-Auto scheme places special emphasis on electric vehicles, hydrogen fuel cell vehicles, and other advanced automotive technologies. The eligibility criteria include minimum investment thresholds, determined sales values, and domestic value addition requirements.
For electric vehicle manufacturers like Ola Electric, the scheme offers substantial incentives based on their Determined Sales Value, which is calculated considering factors like battery capacity, range, and localization of components. Companies must exceed a predetermined threshold of investment and sales to qualify for the incentives.
The scheme has several distinct features in the automotive sector. It offers higher incentives for electric and hydrogen fuel cell vehicles while providing additional incentives for components used in advanced automotive technologies. There is a focus on high-value and high-technology components with an emphasis on deep localization to reduce import dependency. The scheme uses a tiered structure offering greater benefits to manufacturers committed to greater investment and localization.
The PLI-Auto scheme has already attracted significant investments from both established automakers and new entrants in the electric mobility space. Companies like Ola Electric, which received a Rs 73.74 crore incentive for FY 2023-24, exemplify how the scheme is supporting the transition toward sustainable mobility solutions while building domestic manufacturing capabilities.
By incentivizing production over imports, the scheme aims to position India as a global hub for automotive manufacturing, particularly in emerging technologies like electric vehicles, while simultaneously reducing the country's trade deficit and creating employment opportunities.
Sergius Barretto
Viraaj Bhatnagar
Saptarshi Mondal
Kiran Murali
Ketan Thakkar
