EV startups feel left out of PLI scheme for auto and auto components

The government has approved the Production Linked Incentive (PLI) Scheme for the Automobile and Auto Components Industry in India for enhancing India’s manufacturing capabilities for Advanced Automotive Products with a budgetary outlay of Rs. 25,938 crore. The scheme has two components i.e. Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

– For Auto OEMs, the policy document mandates a minimum group revenue of INR 10,000 crores for FY20-21 and INR 3,000 crores of investment in the fixed assets.

– Whereas for the auto-component players, the policy mandates a group revenue of minimum INR 500 crores and INR 150 crores investment in fixed assets.

– The scheme is open to existing automotive companies as well as new investors who are currently not in the automobile or auto component manufacturing business, provided they meet the eligibility criteria laid out in the document.

Benefits marked for EV and component manufacturers

– Incentive proposed under this scheme to Electric vehicle manufacturers will be independent of the incentives given under the FAME II scheme where incentives are provided to customers who buy the vehicles and not to the manufacturers.

– The Champion OEM Incentive scheme is a ‘sales value linked’ scheme that will be applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles.

– All vehicle segments which meet the performance criteria of the FAME-II scheme or as may be notified from time to time by the Ministry of Heavy Industries will be identified as Advanced Automotive Technology Vehicles.

– Under the Component Champion incentive scheme, an additional incentive of 5% has also been provided for components of Battery Electric Vehicles (BEV) and Hydrogen fuel cell vehicles in order to promote future technology vehicles.

Reactions from the EV sector

Although EV industry representatives are glad that the PLI scheme provides due recognition to the EV sector and supporting infrastructure, they feel that the policy favours the big players. Many start-ups in the space are voicing their opinion on being left out of the equation.

EVage Ventures is a Mohali based start-up that is gearing up to launch India’s first 1-ton electric delivery van towards the end of 2021. Inderveer Singh, Founder & CEO of EVage feels that while the scheme is great for large incumbent players, it acts as a speed breaker for the new-age startups.

Singh said, “We are sure that the government is cognizant of the fact that startups have led the EV transition in India, be it bringing in high-end technology, higher TCO for end customers or creating thousands of jobs across classes. We hope that the government amends the PLI scheme by making it more inclusive for startups and allowing one of the conditions as the qualifying factor for startups as opposed to both i.e the sales or investment conditions set in the policy”.

Trontek is a Lithium-ion battery pack manufacturer with a 0.25 GWh manufacturing capacity in NCR. Commenting on the PLI scheme for the Auto sector with regards to the EV push, Samrath Kochar, CEO Trontek opines that the new PLI scheme will go a long way in furthering the growth of the EV sector. However, he feels that there is nothing in the policy for start-ups.

“With the EV industry in India, especially the 2W and 3W EV sector growing in double-digit, there will be a huge demand for support infrastructure like lithium-ion batteries and chargers. The policy has nothing that incentivizes this part of the industry which is surprising considering that close to 80 per cent of the EV support infrastructure industry like lithium-ion batteries and charger manufacturers is made of start-ups and small companies”, he adds.

EVRE is an integrated charging infrastructure company that offers public charging infrastructure in a pay-per-use model across India. Krishna K Jasti, Co-Founder & CEO of EVRE echoed the thoughts expressed by Kochar. While he applauded the inclusion of EV and supporting industry in the policy, he also noted that an overwhelming majority of the EV support industry is under that threshold level of scheme eligibility i.e. revenue of INR 500 crores.

Krishna further said, “One of the areas that need special focus is the charging infrastructure segment. To meet the demand of charging infrastructure for 4-5 million 2W & 3W EVs, the country needs about 100,000 charging points with a ratio of 1:50. We are nowhere close to this. It is very important to have start-ups participate in technology development because a lot of innovation comes from them. Tesla is a great example on how a start-up can revolutionise an industry. It is therefore important that the government provides adequate incentives for this segment to grow and meet the burgeoning demand in this sector.”

What are your thoughts on the PLI scheme and its potential impact on India’s EV industry? Please share in the comments.