India to invest 260 bn in electric-powered vehicles

NEW DELHI, Sept. 15 Reuters - The cabinet of India approved an incentive scheme for the automobile sector aimed at boosting production of electric and hydrogen fuel-powered vehicles and promoting the manufacture of drones.

The government will give about 260 billion rupees (about USD3.5 billion) in incentives to automotive companies and drone manufacturers over a five-year period, anurag Thakur Minister of Information and Broadcasting, said reporters.

The incentive scheme is designed to help India become a global player in the automobile sector, said Thakur.

The scheme is expected to help attract new investment of around 425 billion rupees in the car sector and 50 billion rupees in the drone sector, the government said in a statement.

The incentives will range from 8% to 18% of the sales value of the vehicles or components and will be given to companies under certain conditions, such as a minimum investment over five years and 10% growth in sales each year.

Carmakers, for example, will need to invest 20 billion rupees over the period and auto parts companies will have to invest 2.5 billion rupees, said the government.

The original plan was to spend $8 billion to incentivize auto parts makers to build mainly gasoline vehicles and their components for domestic sale and export, with some added benefit to clean fuel vehicles EVs However, the scheme's focus was redrawn at www: reut.rs 31 pIXP 9 to incentivise clean vehicle makers as Tesla Inc prepares to enter India.

Auto parts manufacturers will get incentives to produce components for clean cars as well as 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, 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 India sees clean auto technology as central to its strategy to reduce oil dependence and cut debilitating air pollution in its major cities, while also meeting its emissions commitment under the Paris Climate Accord.

Domestic automaker Tata Motors is the largest seller of electric cars in India, with rival Mahindra Mahindra and motorbike maker TVS Motor firming their electric plans. India's biggest carmaker Maruti Suzuki has no plans to launch EVs near-term.

Girish Wagh, executive director of Tata Motors, said in a statement that the scheme will help accelerate the country's progress towards green mobility and help attract foreign investment.