New Delhi: The Indian government is getting ready to approve applications from car and auto-parts companies that have Chinese investment, as part of its Production-Linked Incentive (PLI) scheme. This is a sign of more openness toward Chinese capital coming into India’s manufacturing, officials say, remarking on Chinese President Xi Jinping’s recent visit to India.
It could benefit two start-ups by Tata AutoComp Systems, which have also got a partnership agreement with China, and a Joint Company ‘JSW MG Motor India’ owned by JSW Group and SAIC Motor, China’s car maker.
But it was made clear by a senior official that only the application of the existing PLI – Pending List of Investment will now proceed. The Government will not open the scheme for new, brand new applications.
To accelerate the process, the government has also implemented new provisions to approve Chinese FDI proposals faster than previously. Also, delays in approving FDI proposals have been expected to be a delay in number of PLI applications. Indeed, one such one has already received approval, from a Dixon Technologies investment vehicle with a Chinese partner and whose products are electronic components.
About the Auto PLI Scheme
Even the auto PLI scheme was initially approved back in September 2021 with the budget of Rs 25,938 crore. This plan will offer monetary incentives for companies to ramp up production, investment and produce components locally in India, beginning from FY 2023-24.
As of yet, the scheme has performed well. So far, investments have surpassed Rs 45,000 crore under it. The government is anticipating c. Rs 4,000 crore worth of rewards to companies that manage to see their sales figure rise in FY26 this year.
The move is closely being monitored as they indicate a slight relaxation in attitude towards Chinese investments in the auto segment which has seen it getting very strict scrutiny for some years now since the border tension with India began a few years ago.
