The union cabinet on Wednesday approved an incentive scheme for boosting production of electric and hydrogen fuel-powered vehicles and promoting the manufacture of drones in the country.
The government will give about Rs 26000 crore in incentives to auto companies and drone manufacturers over a five-year period, Anurag Thakur, minister of information and broadcasting, told journalists after the cabinet meeting.
"The incentive scheme has been designed to help India become a global player in the automobile sector," the minister said.
The government said in a statement the incentive scheme was expected to help attract new investment of about Rs 42,500 crore in the auto sector. It also said the incentives for drones and drone components industry, will over a period of three years, lead to investments worth Rs 5,000 crore.
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The incentives will range from 8% to 18% of the sales value of the vehicles or components, and will be given to companies if they meet certain conditions such as a minimum investment over five years and 10% growth in sales each year.
Carmakers, for instance, would need to invest Rs 2,000 crore over the period, while auto parts companies must invest Rs 250 crore, the government said.
The big push to electric vehicles government is keen to reduce costly oil imports and cut air pollution in its major cities to meet its commitment under the Paris Climate Accord.
Auto parts makers will get incentives to produce components for clean cars as well as for investing in advanced technologies like sensors and radars used in connected cars, automatic transmission, cruise control and other electronics.
Sunjay Kapur, president of the Automotive Component Manufacturers Association of India (ACMA), said that with global economies de-risking their supply chains, the scheme will help develop the country into "an attractive alternative source of high-end auto components".
Domestic automaker Tata Motors is the largest seller of electric cars in India, with rival Mahindra & Mahindra and motor-bike maker TVS Motor also in the race for electric vehicles. However, the country’s leading carmaker Maruti Suzuki has no immediate plan to launch EVs.
Girish Wagh, executive director at Tata Motors, said in a statement the scheme would accelerate "the country's progress towards green mobility" and help attract foreign investment.
