Elon Musk-owned Tesla, which is aiming for a push-pull entry into India, will receive the same benefits as other competitors under the newly revised PLI scheme, even if the selection of eligible cars was done at the start of the scheme. is likely to obtain. 2 years ago.
Anurag Singh, managing director of Primus Partners’ automotive practice, said the Elon Musk-owned company would not benefit from the scheme because “the choice was made many years ago”. However, he added that it was difficult to comment on developments.
In particular, the event in vibrant Gujarat is likely to address speculation about Tesla’s entry into India amid continued engagement with the government.
Vibrant Gujarat 2017, Source: Wikimedia Commons
Companies such as Mahindra & Mahindra and Hyundai have opposed Tesla’s entry into India, but the current plans are new, elaborated HS Bhatia, managing director of Kerwon Electronics, which manufactures the Korean brand. He said it would “put entrants and existing entrants on the same playing field.”
“Tesla will take more than two years to set up its factory and infrastructure, but compared to companies that are already in India and can get a head start in this regard, Tesla will take more than two years to set up its factory and infrastructure. “But Tesla is a major EV brand, so there has to be a way to get in.”
Bhatia opined that Tesla’s entry will also serve the Indian domestic market.
Abhinav Kalia The CEO and co-founder of ARC Electric said Tesla’s possible entry into the Indian market is poised to bring a “big change” in the electric vehicle (EV) landscape.
“Firstly, the EV market is expected to expand with the introduction of premium and luxury EV models, a segment that currently does not have a significant presence in India. This move will only make electric vehicles sustainable. “This is in line with the global trend towards making the world less desirable and more desirable,” he said.
Karia elaborated that Tesla’s entry will also introduce a cutting-edge ecosystem, including advanced battery technology and cutting-edge manufacturing methods that will be showcased at the Gigafactory.
“This adoption of modern technology and a globally connected supply chain has the potential to push India as a strong competitor in the international EV space.Tesla will act as a catalyst and help other players in the market gain a competitive edge. “This could encourage them to increase their financial performance,” he added.
What does the production-linked incentive system do?
Source: Freepik
Highlighting the benefits of this scheme, Bhatia said that most of the global original equipment manufacturers are considering India as an alternative and that even if India ranks second in manufacturing, “they will still earn billions of dollars in profits. It will be possible,” he said.
The system also gives companies scope to recover profits in subsequent years if they fail to meet their sales targets in the first year, which could be a provision added for new entrants. Mr. Bhatia suggested that there is a high degree of gender.
He also praised the plan to separate OEMs and component manufacturers, saying it would encourage manufacturing of components in India at competitive prices and bring demand back to India from China.
caria saidGovernment initiatives will encourage companies to not only produce EVs but also actively sell them.
“If manufacturers can continue to achieve these conditions, the market could grow by 100 percent annually in the future,” he added.
Why the extension?
Source: Pexels
The scheme was designed to encourage new energy vehicles, but was expanded as the industry took time to navigate this space.
“Selected companies will only benefit from incremental eligible sales that meet investment, localization and value-add criteria. In fact, the industry has taken a while to get to that point,” Singh said. Ta.
On September 15, 2021, the Central Government announced the “Indian Automotive Initiative to Strengthen Manufacturing Capacity of Advanced Automotive Products (AAT)” with a budgetary outlay of Rs 259.38 billion to boost industrial revitalization in India. and the Production-Linked Incentive (PLI) Scheme for the Automotive Parts Industry. Increase manufacturing capacity and attract investment into the automotive manufacturing value chain.
It was assumed that 2019-2020 would be treated as the base year for the calculation of eligible sales for which incentives are paid.
Anmol Singh Jaggi, co-founder and CEO of EV taxi hailing company BluSmart, said the PLI extension is a welcome move and is more relaxed than what will be introduced to recipients in the auto industry. He said the restrictions would further boost the EV industry.
“For companies like BluSmart, this not only ensures an expanded supply base and wider choice of vehicles, but also facilitates potential cost savings by mass producing auto parts and EVs in-house.” he added.
Founded in 2019, BluSmart recently raised $24 million from existing investors, making this its second round of funding in 2023 following a $42 million raise in May.
Notably, the automotive PLI scheme was initially for five years from FY23 to FY27. Companies benefit from PLI for “incremental eligible sales,” which means they need to increase manufacturing capacity and produce and sell beyond their baseline. Most of the selected companies were unable to achieve this in FY2023, as it takes time to increase production capacity in the automobile industry. The government listened to the industry and extended the period from 5 years to his 28th year to 6 years.
Sonam Srivastava, founder and fund manager at Wright Research PMS, said the extension is “more than just a bailout, it will strengthen the industry’s global competitiveness and support advanced technologies such as electric and self-driving cars. This is a strategic initiative to promote the introduction of
However, the success of the PLI regime depends on its effective implementation, and a synergistic approach between government and industry stakeholders will ensure that the goals of increasing production, attracting investment and advancing technology are achieved. He added that it was necessary. Based on India’s ‘Make in India’ vision.
Investments under consideration
Source: Freepik
According to credit rating agency ICRA, major players in the industry are expected to make fresh investments (expected to be over Rs 4,250 crore) over the next five years, which would translate into production increases of over Rs 2,300 crore.
In FY23, when the plan was announced, both companies focused their investments on developing their renewable vehicle base business to strengthen their technology. Representatives asked for another year to get the operation back on track, Singh explained.
Notably, several companies were the first to claim incentives for the scheme and started production along with Tata Motors.
Approved applicants include listed companies Ashok Leyland, Eicher Motors, Mahindra and Mahindra, as well as Bajaj Auto Limited, Hero MotoCorp and TVS Motor Company. Ola Electric was one of the new companies that applied.
Other applicants on the list include Ford India, Hyundai Motor and Kia India.
Amit Kumar, CEO and Co-Founder of RAMP Global, a cloud-based software solutions company The auto industry said the PLI plan could dramatically change the situation by boosting domestic manufacturing, technological advancement and job creation.
“Modifications and extensions address specific demands and provide more predictability and stability for potential investors,” he added.