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Mint
3 days ago
- Automotive
- Mint
Government supports all green mobility, says heavy industries minister Kumaraswamy
New Delhi: Union heavy industries and steel minister H.D. Kumaraswamy has weighed in on the automotive industry's concerns about state governments equating hybrid and electric car incentives, stating that the government continues to support all clean fuel for automobiles. He said the government has incentivized hybrid cars under subsidy schemes such as FAME II, and hybrid ambulances under PM E-drive. In addition, under the PLI-Auto scheme, the government supports all kinds of fuels besides EVs, including CNG, LNG and biofuels. "Under the FAME-II Scheme, EV (electric vehicles) and hybrid version of e-4W was allowed for incentivization. Similarly, in case of PM E-drive scheme, a hybrid version of e-ambulances, that is, electric plug-in hybrid & strong hybrid shall be incentivized," said Kumaraswamy in an email interview with Mint. Also read: Ola Electric's founder Bhavish Aggarwal pays ₹20 crore to top up collateral as shares slide "Further, besides EV, the government supports all kind of fuels viz. CNG, LNG, and bio-fuels under the PLI Auto Scheme," he added. FAME, or Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles scheme, ran for two iterations from FY15 to FY19, and from FY20 to FY24. Currently, the PM E-drive scheme has replaced the FAME schemes. Under all these schemes, consumers could purchase electric vehicles at a subsidized price. The government then reimbursed manufacturers the difference. PLI-Auto is a ₹25,938-crore production-linked incentive scheme for automobiles and automotive components, announced in 2021. It provides incentives to automakers to manufacture vehicles that run on green fuel. Mint reported on 29 May that leading electric car makers Tata Motors Ltd, Mahindra and Mahindra Ltd and Hyundai Motor India Ltd are up in arms over the Delhi government's draft paper proposing equal incentives for hybrid cars and electric vehicles. On the issue of supply disruptions of rare earth magnets from China, the minister said the automotive industry has sought help from MHI, and that "MHI and the government of India" are actively working with industry stakeholders to understand the issue and find solutions. Kumaraswamy also said battery makers in the country have faced hurdles in meeting timelines under the production-linked incentive scheme for advanced chemical cells (PLI-ACC) due to unavailability of technology, skilled manpower, and upstream components, besides challenges in importing essential equipment and machinery. He clarified however, that by 2030, India will have indigenous ACC capacity of over 100 gigawatt-hours. Also read: Rahul Jacob: Manufacturing is crying out for a reality check "However, with support and hand holding M/s Ola Cell Technologies Private Limited (OCTPL) has reported successful installation of 1.4 GWh capacity," said the union minister. "Apart from the PLI beneficiary firms more than 10 companies have already started setting up cell manufacturing unit for more than 100 GWh capacity," he added. The problem echoes similar challenges faced by India's PLI scheme for solar modules, as Mint reported on Monday. The ₹18,100-crore PLI-ACC scheme was introduced in May 2021 to incentivize setting up of 50 gigawatt-hours of battery storage capacity. Three companies -- Rajesh Exports Ltd, Ola Electric Mobility Ltd, and Reliance Industries Ltd -- have been awarded 40 gigawatt-hour of storage capacity till date. This means the companies will receive benefits to set up every unit of battery capacity. Indian manufacturers are capitalizing on the heightened demand for cell components like Cathode active materials, Anode active material, aluminium and copper foils, with many companies setting up component manufacturing units in India to achieve higher value addition and strengthen supply chains. The ministry of heavy industries, which is also the nodal ministry for the PLI-Auto scheme, is expecting claims worth about ₹2,000 crore from the industry in FY26. Under the scheme, manufacturers have to claim incentives for the sales of zero-emission vehicles or other eligible components achieved in a fiscal year, in the following year. For instance, benefits for FY25 sales under the PLI-Auto scheme will be claimed and disbursed in FY26. Also read: India bulks up its drugs PLI scheme in renewed pushback against Chinese imports The expectation for FY26 claims come after a disbursal of ₹322 crore in FY25 to four manufacturers. This time, the minister said the government was expecting nine manufacturers to claim incentives under the PLI-Auto scheme. "Disbursal of incentive under PLI Auto is expected to increase over the years as the number of applicants achieving DVA certification increases as applicants are able to achieve localization as per scheme guidelines. Further, the applicants are expected to achieve DVA certification for more number of AAT products and variants. As more number of OEMs are likely to achieve DVA under the scheme in the coming years, the disbursal will rise in coming years," said Kumaraswamy. In FY26, state-run Bharat Heavy Electricals Ltd (BHEL) will aim to increase its revenue by 20-25% and double it's profits on the back of its existing orderbook of Vande Bharat trains, navy gun mounts, transmission lines, coal gasification projects, and boilers, the minister said. "In the current fiscal, BHEL is focused on consolidating project execution before expanding into newer domains," said the minister. 'We want BHEL to focus on delivery discipline first. Diversification into non-power sectors rail transport, defence systems, transmission and coal gasification will continue, and in some years, will contribute significant percentage of revenue." BHEL is also set to become the nodal agency for demand aggregation of electric vehicle charging infrastructure, and will develop an application to facilitate charging services, Mint reported on 21 May. On 2 June, the ministry notified the guidelines for the scheme to promote the manufacturing of electric passenger cars in India (SPMEPCI), which was launched in March 2024. The scheme allows foreign electric carmakers to import completely built-up units of their vehicles at a reduced import duty, in exchange for investing at least ₹4,150 crore towards manufacturing electric cars in India. They will be allowed to import 8,000 cars every year for five years at an import duty of 15%, as opposed to the 70% levy on imports otherwise. But electric carmakers have to achieve localization of 25% in three years, and 50% localization in five years to qualify for benefits under the scheme. Investments also have to be made in plant and machinery, electric vehicle charging systems, or research and development. American electric vehicle maker Tesla Inc. has not shown interest in the scheme yet, Kumaraswamy had said on 2 June in a press conference. But other manufacturers including Mercedes Benz, Hyundai, Kia, and Skoda-Volkswagen had shown interest in the scheme, he said.
Mint
22-05-2025
- Automotive
- Mint
PLI-Auto adds three more firms to roster
New Delhi: The Centre has approved products made by three more companies—Pinnacle Mobility, Varroc Engineering, and Napino Auto and Electronics—under its flagship production-linked incentive (PLI) scheme for the auto sector, according to data from the government's PLI-Auto portal. he move comes despite limited payouts so far and a sharp cut in the scheme's disbursal target for FY26. According to the portal, EKA Mobility, a subsidiary of Pinnacle Mobility, was approved on 20 May for an electric bus model. Varroc got the green light for seven components on 28 April, while Napino Auto was cleared for an engine management system on 9 May. 'This recognizes EKA's compliance with the stringent eligibility requirements laid out under the PLI scheme for advanced and indigenized electric vehicle platforms,' the company said in a 21 May statement. Varroc and Napino did not respond to Mint's queries. The fresh approvals mark a renewed push to expand the ₹ 25,938 crore PLI-Auto scheme beyond legacy players. But only four companies have received payouts so far, and the budget estimate for FY26 has been cut to ₹ 336 crore from ₹ 3,150 crore last year. These approvals also reflect the growing familiarity with the scheme's requirements, according to Ashim Sharma, senior partner and Business Unit head, Nomura Research Institute Solutions and Consulting. 'Additionally, this also shows that all stakeholders have now completed the learning curve that comes with schemes such as the PLI-Auto scheme. It is likely that companies are now able to ensure that their documentation and other requirements are more 'first time right',' said Sharma. Notified in 2021, the PLI-Auto scheme aims to boost domestic manufacturing of advanced automotive technologies and position India as a global electric vehicle (EV) hub. Of the 115 applicants, 82 were shortlisted as 'Champion OEMs' and 'Component Champions' in early 2022, including Pinnacle, Varroc and Napino. The government began approving individual products under the scheme in June 2023, following the initial shortlisting of firms. But shortlisting is only the first step. To claim incentives, companies must secure product-level approvals from designated automotive testing agencies, based on compliance with technology-readiness and domestic value addition norms. If a vehicle or component is approved by these agencies, the company receives a certificate making the model eligible for incentives under the scheme. So far, 101 product models across 16 companies have received such approval. Yet, only Tata Motors, Mahindra & Mahindra, Ola Electric, and Toyota Kirloskar Auto Parts have received actual payouts. Tata Motors and Mahindra were granted about ₹ 246 crore in January 2025, followed by ₹ 73.74 crore to Ola Electric in March. The ministry of heavy industries said on 26 March that Toyota Kirloskar Auto Parts had also received disbursals, but did not disclose the amount. As Mint reported on 28 February, policy uncertainty has weighed on EV sales, in turn delaying PLI disbursals, which are contingent on post-certification sales. The scheme provides incentives on incremental sales achieved after certification, with claims submitted the following fiscal. For instance, FY25 sales would be eligible for claims filed in FY26. Certification requires proof of at least 50% localisation in approved models. The recent acceleration in PLI-Auto approvals marks a calibrated push towards reshaping India's role in the global EV and auto component value chain, said Randheer Singh, former director with the Niti Aayog. "It reflects the government's intent to expand the beneficiary base beyond legacy OEMs to include next-gen mobility innovators and strategic component makers, a signal that India wants to hedge against global supply disruptions and diversify its manufacturing bets," Singh said. The scheme caters to both incumbent auto firms and new entrants from other sectors. OEMs must have annual revenues of at least ₹ 10,000 crore and invest ₹ 3,000 crore in fixed assets. For component makers, the thresholds are ₹ 500 crore in revenue and ₹ 150 crore in investment. New entrants from outside the auto sector need a global net worth of ₹ 1,000 crore and must commit investment over five years. "Beyond certification, automotive testing agencies are becoming gatekeepers of technology readiness and enablers of deep localisation. Their role must now evolve from compliance monitoring to innovation facilitation, co-developing standards with industry and fast-tracking advanced prototypes," said Singh. EKA Mobility, which recently secured approval under the scheme, has an order book of over 3,500 electric commercial vehicles, including trucks, buses and light commercial vehicles. It operates a manufacturing plant in Chakan, near Pune. Founder and chairperson Sudhir Mehta has reportedly said the company aims to produce 10,000 electric buses annually by FY27. In FY26, the auto component industry's revenues are likely to grow 8-10%, compared to the highs of approximately 14% in FY24, said ratings agency Icra in a February 2025 estimation. The ratings agency also projected the Indian passenger vehicle industry volumes to grow by 4-7% in FY26, a pickup from the muted 0-2% increase seen in FY25.
